OTTAWA: The head of Canada Revenue Agency says the federal body is in the midst of a “blitz” on the Isle of Man tax scheme that heightened public and regulatory concerns over offshore accounts.
Andrew Treusch told the House of Commons finance committee on Thursday that the CRA is actively pursuing hundreds of accounts created by accounting giant KPMG and registered on the island off the coast of England.
“May I say, for the record, we don’t characterize the KPMG file as an amnesty. This is a term that has been applied by the media. It is not one we accept,” he told the committee. “This matter remains before the court. We are determined to continue to get all of the participants in this scheme — and we want our day in court.”
The CRA has come under growing pressure to increase its effort in cracking down on offshore tax evasion — an issue that has gained global attention from issues around KPMG’s out-of-Canada operations and, most recently, by revelations of global tax havens contained in the so-called Panama Papers, named after the location of the law company Mossack Fonseca, whose files were leaked to journalists last month.
Speaking to Canadian lawmakers on Thursday, Treusch said “our work is not done” on the KMPG file. “We are now underway with what I would describe as a blitz on Isle of Man accounts — up to 800.”
The federal government has added more firepower to CRA’s fight against tax avoidance and tax evasion. The 2016-17 budget includes an unprecedented $444-million investment and measure that will increase the agency’s ability to fight those tax schemes.
The agency will also use those funds to hire more auditors to focus on “high-risk, multinational corporations,” Treusch said.
Ottawa expects those new investments will generate an additional $2.6 billion in revenue over the next five years.
In April, the CRA created a new branch to “focus exclusively on international tax, aggressive tax planning, larges businesses, criminal investigations and strategies to combat offshore tax avoidance,” Treusch told the finance committee.
He also said the CRA now has more than 6,400 auditors — a 20-per-cent increase from 2006.
Recent media reports alleged the CRA had offered amnesty to KMPG clients if they agreed to pay taxes owing, as well as interest, on their offshore investments that were not previously reported.
The committee approved a motion to request KPMG provide documents on the Isle of Man tax scheme, which would include “the names of the KPMG employees responsible for the development and marketing of the tax scheme.”
The committee did not ask that the names of KPMG’s clients involved in these offshore accounts also be provided.
The firm will be asked to present those documents to the committee by May 18.
Liberal MP Wayne Easter, chair of the finance committee, said he has had “as many calls on (tax avoidance) issues as I have on any other, because I think Canadians are quite frustrated.”
“Whether it’s right or wrong, they believe there is unfairness in terms of how people who can afford accountants … are treated under the tax system versus those that are doing it on their own and have to deal with the CRA on an individual basis,” Easter said.
“This is a serious issue from an ordinary Canadian’s perspective.”
