The CBC is reporting that the Canada Revenue Agency offered amnesty to multi-millionaire clients caught using what's been called an offshore tax "sham" on the Isle of Man — a reprieve that was supposed to remain secret and out of the public eye until the CBC received a copy of the deal. The amnesty allows for "high net worth" clients of the accounting giant KPMG to be free from any future civil or criminal prosecution — as well as any penalties or fines — for their involvement in the scheme. The clients simply had to agree to pay their back taxes and modest interest on these offshore investments, which they had failed to report on their income tax returns.
This is not an isolated deal, says Canadians for Tax Fairness Executive Director Dennis Howlett. "The CRA has neither the resources nor the political will to take on wealthy tax dodgers or the powerful accounting firms that set up these schemes for them."
The systemic problems at the CRA were most recently exposed in What is Wrong at the CRA? And How To Fix It. Tax Fairness researchers interviewed more than 25 anonymous CRA investigators about the situation at the agency. "This is a serious problem that costs Canada billions of dollars each year. Not fixing it adds to the deficit and allows wealthy Canadians to park money offshore while the rest of us dutifully pay our taxes," says Howlett.
Accounting giants KPMG, Deloite,PwC and Ernst&Young have been associated with tax haven scams in Britain and the European Union. But they aren't the only ones. Recently a Calgary businessman told his story about a "reputable" financial advisor who offerred him a similar scheme.