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Many commentators have suggested that cuts to funding for the CRA mean it doesn’t have the resources to take on tax dodgers with deep pockets.
Ottawa (3 August 2016) — A recent Toronto Star article suggests that the lack of action against KPMG after its scheme to help wealthy Canadians avoid paying taxes came to light is not an isolated example.
According to the article only $13.4 million in fines for cases involving offshore activity have been collected since 2010. That’s less than 1% of what Britain collected in the same period. As the British government has also been criticized for being weak on tax havens and its population is only twice the size of Canada’s, we should be worried.
Federal government weak in face of KPMG tax evasion scheme
In one high-profile case involving tax havens and millions in lost tax revenue the federal government is failing to act. KPMG, a multinational accounting and consulting firm, set up a scheme in a well-known tax haven, the Isle of Man, to help wealthy Canadians to avoid paying millions in taxes.
The scheme came to light in 2012 and was seen as a particularly blatant attempt to evade Canadian taxes. Instead of making the case a priority, the federal government has allowed repeated delays. The Canada Revenue Agency (CRA) was even allowed to try to do a deal with those responsible – something not offered to those caught evading much smaller amounts of tax. After the scheme came to light, the CRA continued to seek advice from KPMG executives.
Cuts to CRA reason for weak response
Many commentators have suggested that cuts to funding for the CRA mean it doesn’t have the resources to take on tax dodgers with deep pockets. While the last federal budget was supposed to restore some of the funding that was cut, it is still not clear if that will be enough.
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