CRA Says Panama Paper Audits Are Underway

It is coming in trickles, but the Canada Revenue Agency is releasing information about their actions on the Panama Papers case.

Earlier this month, CRA Minister Diane Lebouthillier issued a news release that search warrants were recently executed by the CRA and that the agency is working with the RCMP and the Financial Transactions and Reports Analysis Centre on numerous investigations. It also appears that the CRA is auditing 60 Canadian individuals and companies after reviewing international Electronic Funds Transfers over $10,000 to Panama and the Isle of Man. The Minister gives no indication of when decisions will be made about prosecutions and how that information will be made public.

"Promising start," says Dennis Howlett, executive director of Canadians for Tax Fairness.  "But the real test will be whether and how quickly they prosecute."

The CRA has a reputation for letting wealthy tax dodgers off lightly by settling out of court, out of the public eye. That may be justified in a few cases but unless they prosecute some cases it weakens their bargaining position when they do settle out of court and undermines the deterrent effect. "If we have few prosecutions then dodge-savvy advisors tell wealthy clients that it is worth the gamble to evade taxes," says Howlett. "That's when we end up with tax schemes like the KPMG Isle of Man or the many cases revealed in the Panama Papers. Those are likely the tip of the iceberg."

"It is encouraging to hear the CRA has executed some search warrents," Howlett added. "But I wonder if one of them was executed on KPMG, which has been refusing to release the full list of their clients in the Isle of Man tax scheme." Canadians for Tax Fairness is also waiting to hear what further action the government is taking on the KPMG case. "The best way to fight tax haven facilitated tax evasion is to go after the facilitators, and the best way to send a message is to charge one of the leading companies, KPMG, with facilitating tax evasion."