Revenue Canada is testing a software program known as a "spider" that's designed to crawl the Internet searching for tax evaders, according to a report.

The department is joining four other nations in test-driving a new computer program, called Xenon, that is equipped to catch tax cheats using the Internet.

The sophisticated web crawling program, called Xenon, sifts through e-commerce hubs such as gambling, auction and porn sites.

The software was created in The Netherlands three years ago by the Dutch equivalent of the tax department, Belastingdienst.

It has since been expanded and enhanced by an international group of tax authorities, according to a recent report from Wired.com.

Canada is co-operating with Austria, Denmark, the United Kingdom and the Netherlands as part of an international tax-enforcement cartel that's evaluating the effectiveness of the software, the report says.

Canada Revenue Agency spokeswoman Colette Gentes-Hawn confirmed to the Toronto Star that the department is testing the software.

The department is looking for more sophisticated tools for the new age of commerce, she said.

"There's no difference between a business on the Internet, a Sears catalogue and a business down the street. They're all businesses and they all have to pay their taxes," she told the Star.

Xenon works by downloading a web page and its links, thus creating datasets of web content.

Once the spider captures the data, it cross-references the information with national databases and tax records.

But it's unclear whether the information offers red flags that must be probed or provides evidence of tax evasion.

The department is expected to see how the testing goes before deciding whether the program will become a standard investigation tool.

But experts are noting that the data-mining tool could pose privacy concerns.

Michael Geist, an Internet law expert at University of Ottawa, told the Star the software could threaten citizen privacy if it goes beyond what could easily be found on search engines.

Amsterdam-based Sentient Machine Research, which created the software, has developed access controls for its data-mining program, Data Detective.

But Xenon lacks some of these protections, experts have pointed out.

As a result, governments that use this tool may be keeping a copy of everything that the program spiders, which means someone's past actions could come back to haunt them.

Canada's tax authorities declined comment when asked by Wired.com what their data-retention policies are.