A criminal investigation by the Canadian Revenue Agency into KPMG’s use of an offshore tax haven ended more than a year ago without any public announcement, Radio-Canada sources said.
The state of the case is unclear. The Canadian Revenue Agency (CRA) declined to comment on the file, as did federal prosecutors with the Canadian Attorney’s Office, which has been following the file closely over the years.
KPMG did not respond to requests for comment.
In a series of news from 2015, CBC and Radio-Canada announced that KPMG has created a procedure through which wealthy Canadians can transfer assets to a tax haven and then recover their taxes without taxes.
The Isle of Man-based tax avoidance scheme has been active since 1999 and, according to documents filed with the CRA in 2015, was “designed to defraud” the government.
The Minister is no longer talking about the case
In 2017, Revenue Minister Diane Lebutilier promised to get to the bottom of the matter and eventually make public the findings of the investigation.
“We will go all the way and catch them,” Lebutilier told Radio-Canada in March 2017. “When everything goes public, it will be easier.”
She also confirmed that an investigation is under way against both investors and the accounting firm.
National Revenue Minister Diane Lebutilier rises during the question period. Lebouthillier declined to comment on an investigation into an alleged tax evasion scheme. (Justin Tang / Canadian Press)
“Really, because for those involved in creating the scheme, it’s also criminal,” she said at the time.
However, in an interview last week, Lebutilier said he must respect the confidentiality of the file under the terms of the Income Tax Act.
“I can’t talk about a specific case,” she said.
She added that in every criminal investigation, the CRA works hand in hand with federal prosecutors.
“The agency is investigating all kinds of files,” she said. “Once the cases have been collected, [the CRA’s investigators] Work with the Ministry of Justice to determine whether or not cases will be brought to court. “
Hidden assets
CBC and Radio-Canada have published numerous stories about the role of KPMG, one of Canada’s largest accounting firms, in creating a scheme to help multimillionaires hide their fortunes on the Isle of Man.
The scheme allowed wealthy clients to evade tens of millions of dollars in taxes in Canada, making it look as if they had distributed their wealth to anonymous overseas companies. They received back their investment income as tax-free gifts.
In 2016, KPMG Senior Executive Director Gregory Vibe told the parliamentary committee that this investment strategy had been externally reviewed and in line with the measures and standards in force at the time.
Wiebe said the Isle of Man tax deal – which cost the company $ 1.6 million in fees to create 16 plans – “fully complies with all applicable tax laws” in force in Canada in 1999 and has not been used since 2003.
Wiebe said the Conservative government’s tightening of tax rules in 2013 and 2014 dramatically changed the landscape. He said his own company is now carefully reviewing any tax-saving plan for “reputational” risk and to ensure it is legal and complies with general tax avoidance rules.
Also in 2016, a senior CRA official told lawmakers that investigations into the matter were ongoing, but did not say whether they were criminal or not.
“We have taken the position that the specific structure of the Isle of Man is incompatible. Only the courts can give us a final decision, and that has not yet happened,” said Ted Gallivan, now a senior official at the Canadian Border Services Agency.
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