A Canadian Tax Agency criminal investigation into KPMG’s use of an offshore tax haven ended more than a year ago without any public announcement, sources told Radio-Canada.
The status of the case is uncertain. The Tax Agency of Canada (CRA) declined to comment on the case, as did federal prosecutors from the Tax Service of Canada, which has been following the case closely over the years.
KPMG did not respond to requests for comment.
In a series of news items dating back to 2015, CBC and Radio-Canada have reported that KPMG established a procedure by which wealthy Canadians could transfer assets to a tax haven and then recover their tax-free funds.
The Isle of Man-based tax evasion scheme had been active since 1999 and, according to documents submitted to the Tax Court by the CRA in 2015, was “intended to deceive” the government.
The minister no longer talks about the case
In 2017, Finance Minister Diane Lebouthillier promised to get to the bottom of the matter and finally make the findings of the investigation public.
“Let’s go to the end and catch them,” Lebouthillier told Radio-Canada in March 2017. “When everything goes public, it will be easier.”
He also confirmed that there was a criminal investigation into both the investor and the accounting firm.
National Finance Minister Diane Lebouthillier stands up during question period. Lebouthillier refuses to comment on an investigation into an alleged tax evasion scheme. (Justin Tang / Canadian Press)
“In fact, because for those involved in creating a scheme, that’s also criminal,” he said at the time.
In an interview last week, however, Lebouthillier said he had to respect the confidential nature of the file under the terms of the Income Tax Act.
“I can’t talk about any particular case,” he said.
He added that in any criminal investigation, the CRA works hand in hand with federal prosecutors.
“The agency is investigating all sorts of cases,” he said. “Once the cases have been brought together, [the CRA’s investigators] work with the Department of Justice to determine whether or not cases are taken to court. “
Hidden assets
CBC and Radio-Canada have published several stories about the role played by KPMG, one of Canada’s largest accounting firms, in creating a plan to help billionaires hide their fortunes on the Isle of Man.
The scheme allowed wealthy customers to dodge tens of millions of dollars in taxes in Canada by pretending to have donated their fortunes to fictitious corporations abroad. They received their income from the investment as tax-free gifts.
In 2016, a senior KPMG executive, Gregory Wiebe, told a parliamentary committee that this investment strategy had been externally verified and complied with the measures and standards in force at the time.
Wiebe said the Isle of Man tax deal, which compensated the company for $ 1.6 million in commissions for establishing 16 plans, “fully complied with all applicable tax laws” in force in Canada in 1999 and not used since 2003.
Wiebe said the Conservative government’s tightening of tax protection rules in 2013 and 2014 drastically changed the picture. He said his own company is now carefully reviewing any “reputational” risk-saving tax savings plan and to make sure it is legal and complies with general anti-circumvention tax rules.
Also in 2016, a senior CRA official told lawmakers that investigations into the matter were continuing, but did not say whether they were criminal in nature or not.
“We have taken the position that the specific structure of the Isle of Man is not being met. Only the courts can give us a final determination, and that has not yet happened,” said Ted Gallivan, now a senior Canadian Border Services official. . Agency.