CRA audits of ultra-wealthy Canadians yield zero prosecutions, convictions
Data from the Canada Revenue Agency shows its recent efforts to combat tax evasion by the super-rich have resulted in zero prosecutions or convictions.
In response to a question tabled in Parliament by NDP MP Matthew Green, the CRA said it referred 44 cases on individuals whose net worth topped $50 million to its criminal investigations program since 2015.
Only two of those cases proceeded to federal prosecutors, with no charges laid afterward.
The lack of prosecutions follows more than 6,770 audits of ultra-wealthy Canadians over the past six years.
It also comes amid a roughly 3,000 per cent increase in spending on the agency's high-net-worth compliance program between 2015 and 2019 due to a beefed-up workforce, according to an October report from the parliamentary budget officer.
Green said federal authorities avoid pursuing Canada's biggest tax cheats but go after small business owners who don't pay their taxes under a "two-tiered system" pocked with "loopholes."
"The CRA is not pursuing Canada's largest and most egregious tax cheats. And yet for a small mom-and-pop shop, if you don't pay your taxes long enough -- two or three years -- then they will absolutely go in and garnish your wages because they know you don't have the ability to take it to court," he said.
"There's a tax code for the ultra-wealthy and then there's a tax code for the rest of us," Green said. "The rich are taking advantage of the holes in our tax system. And this Liberal government continues to allow them to do so."
The issue is top of mind for federal lawmakers this week as a parliamentary committee convened Tuesday to discuss the CRA's attempts to combat tax evasion and avoidance.
"The ultra-rich will not be treated with kid gloves. I have no respect for those who cheat the tax system. But I can tell you that if you think that we're going to resolve everything, I think you're naive," National Revenue Minister Diane Lebouthillier told the panel in French, citing the need for international co-operation.
"The super-wealthy are able to pay for super lawyers, super tax specialists. They can do everything to get out of paying their fair share."
Increasingly, those individuals are going to court when audited in order to withhold documents, with about 3,000 "complex" cases now ongoing, the minister said.
"The fact that the cumulative 44 investigations ... have not resulted in convictions within five years is a result of the complexity of the cases and the high legal threshold for securing a criminal conviction in Canada," CRA spokeswoman Pamela Tourigny said in an email.
Members of the House finance committee also passed a motion Tuesday from NDP finance critic Peter Julian calling on the government to launch a public inquiry into tax planning by KPMG in connection with shell companies -- named after ancient swords -- and allegations of investment fraud on the Isle of Man.
The requested investigation follows reports that the British Crown dependency, renowned as a tax haven, may have been linked to alleged fraud that saw millions siphoned offshore and embezzled from Canadian investors.
"KPMG Canada has been very clear that we have no connection whatsoever to the Isle of Man sword companies or the CINAR fraud," spokeswoman Tenille Kennedy said in an email, adding that the company will continue co-operating with the CRA.
Conservative national revenue critic Philip Lawrence said in a statement that "well-connected elites" enjoy exemptions "while everyday Canadians are left further behind," and that Tories stand for tax fairness.
Denis Meunier, former director general of the CRA's criminal investigations directorate, said the dearth of criminal charges is striking. But authorities often lack resources to carry out pricey, painstaking prosecutions across international borders and can opt instead for hefty non-criminal penalties.
"They may have some of the best lawyers fighting, so you may see that more in Tax Court, rather than convictions," Meunier said of proceedings against the ultra-wealthy.
Settlements are much more common than criminal prosecutions, saving investigators time and money, said Kevin Comeau, author of a 2019 C.D. Howe report on money laundering.
"The problem with that is that you don't have on the public record that these persons did not comply with the tax law. And therefore you don't have that public shaming and you don't have that warning to other tax cheats out there," he said.
Tax evasion often boils down to unreported incomes or exaggerated expenses, which can then be deducted from income declared on tax filings.
"It's not atypical to see individuals pay out invoices from foreign consulting companies. You pay a million bucks for a specialized report, and the company is a consulting firm based in a tax haven (where the real, or 'beneficial,' owner is hidden from view) and basically the company is owned by the same guy in Canada whose business it is," Meunier said.
It can be extraordinarily tough to trace money through the warren of shell companies and tax havens used by those seeking to stash their loot.
"They hear you coming. They know CRA is after them," said Comeau."They can just put in a couple more trusts and companies in other jurisdictions to make the trail longer at any time. It's a never-ending rabbit hole."
The Liberal budget in April allotted $2.1 million over two years for the Industry Department to launch a new beneficial ownership registry by 2025. The government has also pledged $606 million over five years starting this year to "improve the criminal investigations program" and crack down on illicit tax schemes, including by super-rich Canadians, Lebouthillier said.
Comeau, a retired lawyer and member of Transparency International Canada's working group on beneficial ownership transparency, said the registry could be a "game changer" for tax avoidance in a country with some of the weakest financial transparency laws among liberal democracies.
"Even if it is legal, they're not paying their fair share. So there's going to be huge social pressure on those persons to unwind those dealings and actually start bringing their money back to Canada," he said.
"Many of these people are very highly respected people in the Canadian establishment."
Tax evasion -- a predicate offence, meaning it forms a component of a more serious crime, such as money laundering -- differs categorically from tax avoidance, a legal means of keeping cash out of tax collectors' hands through clever accounting.
But critics say the vast troves of wealth that remain untouchable to government authorities reveal the need to tighten tax rules as well as hunt down cheats.
"In former times we didn't see tax avoidance as a crime," said Brigitte Unger, professor of economics at Utrecht University whose book, "Combating Fiscal Fraud and Empowering Regulators," was published in March.
"But now we see the public sector needs money, and this is effectively stealing money from public coffers, and should be treated as such."
---------
This report by The Canadian Press was first published June 22, 2021.
IN DEPTH
Trudeau, key election players to testify at foreign interference hearings. What you need to know
The public hearings portion of the federal inquiry into foreign interference in Canadian elections and democratic institutions are picking back up this week. Here's what you need to know.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
Who is supporting, opposing new online harms bill?
Now that Prime Minister Justin Trudeau's sweeping online harms legislation is before Parliament, allowing key stakeholders, major platforms, and Canadians with direct personal experience with abuse to dig in and see what's being proposed, reaction is streaming in. CTVNews.ca has rounded up reaction, and here's how Bill C-63 is going over.
As Poilievre sides with Smith on trans restrictions, former Conservative candidate says he's 'playing with fire'
Siding with Alberta Premier Danielle Smith on her proposed restrictions on transgender youth, Conservative Leader Pierre Poilievre confirmed Wednesday that he is against trans and non-binary minors using puberty blockers.
TREND LINE What Nanos' tracking tells us about Canadians' mood, party preference heading into 2024
Heading into a new year, Canadians aren't feeling overly optimistic about the direction the country is heading, with the number of voters indicating negative views about the federal government's performance at the highest in a decade, national tracking from Nanos Research shows.
Opinion
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
opinion Don Martin: Pierre Poilievre's road to apparent victory will soon start to get rougher
Pierre Poilievre and his Conservatives appear to be on cruise control to a rendezvous with the leader's prime ministerial ambition, but in his latest column for CTVNews.ca, Don Martin questions whether the Conservative leader may be peaking too soon.
opinion Don Martin: The Trudeau lessons from Brian Mulroney's legacy start with walking away
Justin Trudeau should pay very close attention to the legacy treatment afforded former prime minister Brian Mulroney, who died on Thursday at age 84, writes columnist Don Martin.
opinion Don Martin: ArriveCan debacle may be even worse than we know from auditor's report
It's been 22 years since a former auditor general blasted the Chretien government after it 'broke just about every rule in the book' in handing out private sector contracts in the sponsorship scandal. In his column for CTVNews.ca, Don Martin says the book has been broken anew with everything that went on behind the scenes of the 'dreaded' ArriveCan app.
CTVNews.ca Top Stories
Deaths of 4 people on Sask. farm confirmed as murder-suicide
The deaths of four people on a farm near the Saskatchewan village of Neudorf have been confirmed a murder-suicide.
Grandparent scam: London, Ont., senior beats fraudsters not once, but twice
It was a typical Tuesday for Mabel Beharrell, 84, until she got the call that would turn her world upside down. Her teenaged grandson was in trouble and needed her help.
developing Bus plunges off a bridge in South Africa, killing 45 people. An 8-year-old child is only survivor
A bus carrying worshippers headed to an Easter festival plunged off a bridge on a mountain pass and burst into flames in South Africa on Thursday, killing at least 45 people, authorities said.
Calgary bridges remain closed due to ongoing police incident
Calgary police have shut down a number of bridges into and out of the downtown core as officers deal with a distraught individual.
Why some Christians are angry about Trump's 'God Bless the USA' Bible
Former U.S. President Donald Trump is officially selling a copy of the Bible themed to Lee Greenwood’s famous song, 'God Bless the USA.' But the concept of a Bible covered in the American flag has raised concern among religious circles.
George Washington family secrets revealed by DNA from unmarked 19th century graves
Genetic analysis has shed light on a long-standing mystery surrounding the fates of U.S. President George Washington's younger brother Samuel and his kin.
Sunshine list: These were the Ontario public sector's highest earners in 2023
Ontario released its annual sunshine list Thursday afternoon, noting that the largest year-over-year increases were in hospitals, municipalities, and post-secondary sectors.
Kinew, Poilievre meet at Manitoba legislature, discuss each other's priorities
Premier Wab Kinew and federal Conservative Leader Pierre Poilievre met at the Manitoba legislature Thursday afternoon.
Rainfall warnings of up to 80 mm among weather alerts in effect for 6 provinces
Rainfall warnings of up to 90 millimetres and other alerts have been issued for six Canadian provinces, according to the latest forecasts.
Local Spotlight
Conservation officers seize 9-foot python from Chilliwack home
B.C. conservation officers recently seized a nine-foot-long Burmese python from a home in Chilliwack.
N.B. man wins $64 million from Lotto 6/49
A New Brunswicker will go to bed Thursday night much richer than he was Wednesday after collecting on a winning lottery ticket he let sit on his bedroom dresser for nearly a year.
Ontario auto-insurance changes could leave some vulnerable, says expert
The Ontario government is introducing changes to auto-insurance, but some experts say the move is ill-advised.
Tipping is off the table at this Toronto restaurant
A Toronto restaurant introduced a surprising new rule that reduced the cost of a meal and raised the salaries of staff.
A tiny critter who could: Elusive Newfoundland Marten makes improbable comeback
Newfoundland’s unique version of the Pine Marten has grown out of its threatened designation.
Ontario man loses $12K to deepfake scam involving Prime Minister Justin Trudeau
A Toronto man is out $12,000 after falling victim to a deepfake cryptocurrency scam that appeared to involve Prime Minister Justin Trudeau.
Record-setting pop tab collection for Ontario boy
It started small with a little pop tab collection to simply raise some money for charity and help someone — but it didn’t take long for word to get out that 10-year-old Jace Weber from Mildmay, Ont. was quickly building up a large supply of aluminum pop tabs.
'I was just like, holy cow!': Saskatoon dumpster divers reclaim wasted valuables
There’s a group of people in Saskatoon that proudly call themselves dumpster divers, and they’re turning the city’s trash into treasure.
Ontario to balance budget ahead of 2026 election, citing delay due to 'economic uncertainty'
Ontario is facing a larger than anticipated deficit but the Doug Ford government still plans to balance its books before the next provincial election.