There are some questions to be answered.
A week ago, CBC News revealed that at least some of the wealthy users of a tax dodge offered to rich Canadian families had been given secret Canada Revenue Agency (CRA) deals to settle their tax liabilities.
Members of roughly 20 families had used a tax avoidance plan pitched by KPMG. The accounting firm told the “high worth” families that they could “donate” at least $5 million to shell companies on the Isle of Man, and avoid income tax in the process.
At least some of the tax dodgers were offered deals last year offering to let them pay the back taxes due on their income, along with some interest. Now, it seems some of those deals are being made.
Go into federal Tax Court records just for 2019, and you can find ordinary citizens fighting not only reassessments by the Canadian Revenue Agency, but interest, penalties and gross negligence penalties as well.
The CBC was told by a CRA representative that the deals were, “supported by the facts of this particular case,” and that the agency had “maximized revenue” by making a decision to not go through Tax Court — “There is generally substantial savings to the public and a benefit to the justice system when cases are resolved through a settlement.”
But what about those who don’t have millions of dollars, for whom “maximizing revenue” doesn’t seem to be the order of the day?
Go into federal Tax Court records just for 2019, and you can find ordinary citizens fighting not only reassessments by the Canadian Revenue Agency, but interest, penalties and gross negligence penalties as well.
One B.C. couple lost $80,000 in RRSP contributions that was stolen in a scam. It was taken from an RRSP program that they had checked out and found to be legitimate — but after the theft, the CRA disallowed their RRSP contributions and added the money to their taxable income.
(We should point out, the CRA added it to their taxable income in the year 2000, and added penalties, including gross negligence penalties.)
Nineteen years after 2000, a Tax Court judge ruled that the reassessment was improper.
No behind-the-scenes settlement deal there, just the CRA adding more financial insult to $80,000 in injury.
Perhaps the couple hadn’t heard that “CRA practice also recognizes that the earliest possible resolution of disputes is in the public interest, as lengthy litigation is costly to all parties and the outcome of complex, tax-related litigation processes may be difficult to predict,” as a media relations officer told the CBC about the Isle of Man scheme.
But back to the main issue: as settlements are made, it looks like the people who developed and pitched a scheme that saw more than $130 million moved offshore will not, as the federal Liberals said when the scheme was discovered, have to explain the process in court.
Taxation has to be fair and transparent. This is neither.
