Economy

Taxpayer Accounts Hacked: CRA's Failure to Protect Canadians' Data Exposed

Monday 28 October 2024 - 11:55

A shocking investigation by CBC's The Fifth Estate and Radio-Canada has uncovered a massive breach of taxpayer accounts, with tens of thousands of Canadians' personal data compromised. The Canada Revenue Agency (CRA) has admitted to underreporting cyberattacks against taxpayers, with over 31,000 "material" privacy breaches reported between March 2020 and December 2023, affecting 62,000 individual taxpayers.

The investigation found that hackers obtained confidential data from H&R Block Canada, one of the country's largest tax preparation firms, and used it to gain unauthorized access to hundreds of Canadians' personal CRA accounts. Imposters changed direct deposit information, submitted false returns, and pocketed more than $6 million in bogus refunds from the public purse.

The CRA's failure to detect and prevent these breaches has raised concerns about the agency's ability to safeguard taxpayers' data. André Lareau, an associate tax professor at Laval University, stated, "The door is open, and some people are infiltrating the system. But the CRA does not seem to have found the key to lock the door."

The investigation also revealed that the CRA has a "pay and chase" culture, where tax refunds are issued quickly, and discrepancies are audited later. This approach leaves a gaping hole for fraudsters to flourish. Sources within the CRA have told The Fifth Estate/Radio-Canada that the agency's inability to detect a multitude of tax return frauds is a major concern.

The CRA has admitted to paying out more than $190 million in bogus payments connected to "confirmed" cases of privacy breaches between 2020 and early October 2024. However, the agency's statement appears to contradict the $6 million lost in this year's H&R Block data breach alone, according to sources.

The investigation has also found that the CRA does not always share key information with financial institutions, even when it suspects fraudsters are using one of their bank accounts. Sources added that the agency's lack of internal communication has slowed down the hunt for the hackers.

The CRA's failure to protect taxpayers' data has raised concerns about the agency's ability to safeguard Canadians' personal information. A parliamentary inquiry has been called for to determine the "magnitude" of the problem and to compel answers from the CRA and the minister.

The CRA's statement on the matter has been met with skepticism, with many questioning the agency's ability to protect taxpayers' data. The agency's spokesperson, Kim Thiffault, stated, "As scammers adapt their practices, so does the CRA." However, the investigation has found that the CRA's efforts to crack down on fraudulent returns have been hindered by its own policies and procedures.

The investigation has raised important questions about the CRA's ability to protect taxpayers' data and the need for greater transparency and accountability. As the agency continues to grapple with the fallout from these breaches, Canadians are left wondering if their personal data is safe in the hands of the CRA.