CRA faces backlash over amnesty offer for KPMG’s tax avoiders

CRA is granting amnesty to KPMG clients who used an offshore shell company to avoid taxes, CBC reports.

CRA accused KPMG of devising an elaborate offshore tax avoidance scheme that enabled at least one wealthy Canadian family to pay no tax on millions of dollars of investments. The operation, which started in 2002, was discovered by CRA bureaucrats in 2012.

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The scheme involved gifting funds to and from shell companies in the Isle of Man, which sits between England and Ireland. In return, it’s alleged KPMG would take a 15% cut of their clients’ savings. The tax agency took its allegations to court to discover how many people were participating in the scheme. That effort is ongoing.

Now, CBC reports that CRA executives decided to grant amnesty to 15 of KPMG’s clients. The decision was controversial inside the tax department, CBC says. Some bureaucrats believed CRA should have turned the clients over to authorities for criminal investigation.

There has also been political outcry about the deal. NDP leader Tom Mulcair says the government should take back the amnesty offer, which was made in May 2015 under the Conservative government. Watchdog group Citizens for Tax Fairness also wants a probe into why the deal was made, reports CBC.

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The 15 clients CRA offered amnesty to wouldn’t be subject to penalty, fine or investigation as long as they pay back taxes and interest. So far, there appears to be at least 26 clients with more than $130 million in offshore accounts.

CRA says it’s not giving up on the case.

“The case is actively being pursued. This includes audits and reassessments of several taxpayers known to the agency,” a statement from CRA says.

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“The agency will pursue this case to the fullest extent possible, as we do with all other cases of aggressive non-compliance.” CRA adds.

Since January 2015, CRA has been monitoring all international electronic funds transfers worth more than $10,000 and it has records on more than 16 million transfers in and out of Canada.

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