Why is the CBC refusing to hand over info to CRA about potential CDN tax cheats?

[tay]

The Federal Court of Canada has admonished lawyers for KPMG and the Canada Revenue Agency over yet another delay in a slow-moving court action that began more than three years ago.

That's when federal authorities won a judge's order to obtain names of the accounting firm's wealthy clients using its Isle of Man tax dodge.

KPMG had been ordered to provide key documents by May 13. However, when CBC News asked the court for those records, the court realized that the accounting firm failed to meet its deadline — and that lawyers for the CRA went along with it.

Lawyers for both the accounting firm and the CRA told the court that they had taken an "extension" on the deadline, not understanding they needed permission from Mireille Tabib, the case management judge.

A letter from the court to both parties on June 10 quoted the judge as saying the parties needed to move more quickly.

"The proposed [dates] are not acceptable to the court," the letter told lawyers for the Department of Justice, which is representing the CRA, and law firm Osler, representing KPMG.

In a letter filed in court Tuesday by KPMG lawyer Mahmud Jamal, sent "on behalf of both parties," KPMG and CRA now say they will provide their materials on Oct. 20 and Dec. 1 respectively. The hearing date itself has not changed. It is Jan. 24 to 26, 2017.

The documents, referred to as a "motion record," would have included original materials about the Isle of Man "tax product," affidavits from the central players involved in the scheme, transcripts of examinations for discovery, and other exhibits.

The Isle of Man scheme was uncovered by CRA auditors in 2012, a scheme the agency would later allege was a "sham" that "intended to deceive" authorities.

Despite those allegations, the agency mysteriously let the case fall dormant after KPMG decided to fight the judge's order.

Last year, lawyers for CRA and KPMG admitted they had been having out-of-court discussions. It was later revealed the agency had made a secret amnesty offer to KPMG's wealthy clients, which offered them a "no penalties" deal to pay the back taxes owing and some modest interest.

Details of that confidential offer were leaked to CBC News in a brown envelope.

Still, a small handful of those KPMG clients refused the offer. As a result, the CRA was forced to go back to court to try to get the full list of names.

Dennis Howlett, executive director of Canadians for Tax Fairness, says he understands why KPMG would want to delay the case, but he questions why CRA didn't object.

"Delay tactics are part of the tool kit of tax avoidance," he says. "But the government is wrong to let them get away with that."

Court chides KPMG, CRA for delay in Isle of Man tax dodge case - Business - CBC News

 

[taxslave]

You're worried about tips? I bet the tips in total equal what one Company avoided paying in a year. What about self employed being able to write off their gas, insurance, food/entertainment etcetera.



The last waitress I talked to said she often made $100 a day in tips. Multiply that by all the wait staff in Canada and you have a sizeable chunk of unreported cash.
You better read the rules on what can be written off as business expense. Gas, insurance of course but food and entertainment has strict limits. Would the etcetera be wages and benefits paid to staff?Advertising?

 

[Locutus]

'a brown envelope'

You’re living in the past, man.

 

[taxslave]

'a brown envelope'

You’re living in the past, man.

Yeah we use walmart bags now.

 

[tay]

You're worried about tips? I bet the tips in total equal what one Company avoided paying in a year. What about self employed being able to write off their gas, insurance, food/entertainment etcetera.

The last waitress I talked to said she often made $100 a day in tips. Multiply that by all the wait staff in Canada and you have a sizeable chunk of unreported cash.
You better read the rules on what can be written off as business expense. Gas, insurance of course but food and entertainment has strict limits. Would the etcetera be wages and benefits paid to staff?Advertising?

Your example is anecdotal. Not all wait staff make a $100.00 a day or there would be no churn in the restaurant biz. And even if she did make 100 a day and claimed it her tax rate would be around 30%. And let's not forget a very relevant aspect to a waitress; looks. Once a hotter one shows up, the higher tips migrate to the new one and the others eventually drop out of the biz.

And I know the rules about what can be written off against earnings very well and you would be surprised as to what can be done. The etcetera also includes dry cleaning, clothing purchases, partial residential property taxes and utilities if you have a home office, furnishing and equipment (including pencils and paper, staples, paperclips) for said 'home office', lawn care equipment and/or maintenance (if you use a service company) and other improvements to your home to maintain a high standard for your 'home office' and the list goes on.

Did I mention you can also write off 100% of 'accountant fees' ........?

Montreal-based clothing maker Gildan earned $396 million in profit last year, but paid just over $6 million in cash taxes — a rate of about two per cent.

Drug maker Valeant, based in nearby Laval, Que., booked $1.1 billion in profit in 2014 but paid only $110 million in tax.
It seems like a fiscal fantasy for Canadians used to personal income tax rates of up to 54 per cent. But both companies, and dozens more, did it completely legally, thanks in part to offshore tax havens.

In the last half-decade, deals the federal government enacted with offshore jurisdictions, ostensibly to allow the Canada Revenue Agency to crack down on tax evasion, have instead permitted tens of billions of dollars to flow into those locales, totally above board.

A joint CBC/Toronto Star investigation, as part of ongoing coverage of the Panama Papers, examined those international tax agreements and treaties and found an explosion of companies taking advantage of the tax opportunities the deals provide.

"Usage of tax havens have gone up significantly in the last five years," said Art Cockfield, a tax law expert and professor at Queen's University in Kingston, Ont.

In Gildan's case, much of the company's day-to-day operations — design, sales, manufacturing, customer service, marketing and distribution — are in Barbados.

The Caribbean country has been a darling of corporate Canada because it has had a tax treaty with Ottawa since 1980. The pact allows Canadian companies with subsidiaries in Barbados — there are more than 1,000 with offices there, including titans like Petro-Canada and Loblaws — to bring their offshore profits back home subject only to the low Barbadian income tax rate of between one and 2.5 per cent.

Valeant has also used a Barbados subsidiary to cut its tax bill. When it merged with Canadian pharmaceutical firm Biovail in 2010, Valeant CEO Mike Pearson pledged, "We'll figure out exactly how to take most advantage of this tax structure."

But serene, sun-kissed Barbados is being supplanted by other palm-fringed tropical paradises where the tax rates are even lower.

Since 2009, Canada has signed 23 tax information exchange agreements, or TIEAs, with tax havens from Aruba to Turks and Caicos.
Originally designed by the Organization for Economic Co-operation and Development to help make offshore havens more transparent, TIEAs are pacts that see those countries commit to handing over secret banking and other financial details to Canada as it tries to ferret out tax cheats.

Except Canada added a special twist: The then-Conservative government amended the tax rules to make every country Canada has a TIEA with into a new Barbados, giving companies the right to set up business there, earn profits that face little to no corporate tax, and then bring that money back tax-free.

"The tax havens were thrilled," Cockfield said, attributing the changes — which weren't part of the original intent — to successful corporate lobbying.

Since Canada started activating its TIEAs in 2011, huge sums of money — $55 billion — have legally flowed into those very tax havens.

The amount of Canadian money in zero-tax Bermuda has more than doubled since then, while about $20 billion has left Canada for the Cayman Islands. Those two countries together now have more Canadian investment than in Mexico, Brazil, China and Australia combined. Canada's big banks partake, too, and have branches everywhere from Anguilla to St. Lucia.


Deals Canada signed to catch tax cheats allow billions in taxes to escape - Business - CBC News

 

[tay]

Do the Liberals have the nerve to fix the tax system?


It’s not often that the Business Council of Canada, the nation’s most important lobby for big business, sees eye-to-eye with the Canadian Centre for Policy Alternatives, the left-leaning think tank. So this should tell you something about the sorry state of our tax system: Both groups are pointing to the need for sweeping reform.

True, the Business Council is looking for a lower tax burden on businesses, while the Centre for Policy Alternatives is seeking a system that will increase redistribution from rich to poor. But both groups recognize that the current system is far too complex, confusing and riddled with loopholes — that it’s crying out for a radical overhaul.

Fifty years ago, in 1966, the Royal Commission on Taxation led by Kenneth Carter published its six-volume report outlining the need for reform of the Canadian tax system. Although its more progressive recommendations were watered down, it was the last time we had a systematic study of our tax system and what ails it.

Sophisticated tax avoidance operations like the Isle of Man scheme have many Canadians convinced that there’s one tax system for the rich and another, more onerous one for the rest of us. The need for tax reform has never been more urgent.

It’s time to do again what the Carter Commission did — analyze the system from top to bottom with the aim of simplifying tax law and making it more effective.

In February, the department published a comprehensive review of federal tax expenditures, tabulating the 200 or so separate preferential tax rates, exemptions, deferrals and tax credits that have turned the tax system into a maze of loopholes. Every time the government gives out a tax credit for some activity, or gives a tax break for another, it costs the treasury money. The total cost of these tax expenditures is a staggering $157 billion a year.

Eliminate these tax breaks for the few and you can reduce income taxes for all, or use the money to finance programs that actually do some good.

Finance Minister Morneau has promised a review of tax expenditures but, so far, he’s been coy about providing details. But the review shouldn’t stop there.

Do the Liberals have the nerve to fix the tax system?

 

[tay]

CRA has double standard for tax cheats

The CRA won’t divulge the identities of people convicted for stashing millions offshore, but it names and shames those caught owing small amounts of tax.

Dragan Micanovic was fined $2,000 by the CRA after a client refused to pay for work, and he fell behind on his taxes. The CRA named Micanovic on its website as a convicted tax cheat, but the agency refuses to name nine people convicted of stashing millions of dollars in offshore tax havens

The CRA claims at least nine people have been convicted of offshore tax evasion over the last two years, receiving $4 million in fines and 84 months of jail time, but it is keeping the names of these tax cheats secret.

Yet there are dozens of people — carpenters, hairdressers, farmers, plumbers, foresters, realtors, architects — who are named and shamed on the CRA’s website for not paying small amounts of tax.

This double standard means that small business owners who fall behind on tax payments, or servers who don’t declare their tips, are publicly outed for their relatively paltry offences, while wealthy individuals and businesses caught hiding millions in offshore tax havens are guaranteed anonymity.

Even though criminal convictions for tax evasion should be public information, without the defendants’ names, case numbers or knowledge of which courthouse the convictions were handed down in, it’s impossible to determine the identities of offshore tax cheats.

In the wake of the Panama Papers revelations, Ottawa pledged $444 million over five years to crack down on tax cheats and said it will focus on those who use offshore tax havens. But in several high-profile cases of offshore tax evasion that have emerged over the last year, including one scheme in which KPMG helped wealthy clients hide $130 million in the Isle of Man, the perpetrators remain unnamed.

“Although the CRA can provide aggregate statistics on the convictions with links to money or assets held offshore, we are not able to give the names and case numbers of the people convicted as this may contravene taxpayer confidentiality,” wrote CRA spokesperson David Walters in an email to the Star.

“The details that we are able to include in our conviction news releases is limited to what is presented in the courts and part of the public record. As a result, if the public record does not include information linking the convicted taxpayer to money and assets located offshore, we are not able to report this information,” he wrote.

In April, the federal anti-money-laundering agency, Fintrac, fined a bank $1.1 million for failing to report a suspicious transaction, but refused to name the institution.

“It’s outrageous,” said NDP MP Murray Rankin. “All the CRA wants to do is go after big penalties for the hairdresser who wrote off more than she should.”

The former revenue critic says the policy contributes to the development of a two-tier tax system.

“The people who have the ability to arrange their affairs using tax havens tend to be large family trusts, corporations and the like, whereas the government goes after little people to collect their taxes very aggressively,” he said.

Queen’s University tax law Prof. Arthur Cockfield questions the CRA’s claims to have convicted any real offshore tax evaders.
“I can’t find any successful prosecutions,” he said. “I’ve had researchers look.”

If the government doesn’t publicize the names of convicted offshore tax cheats, there’s no deterrence for others who might go down the same path, Cockfield said.

“If you want to deter criminals, convict them,” he said.

Sen. Percy Downe, who has made cracking down on offshore tax evasion his personal quest, said he has not been able to get a single name out of the CRA.

“The CRA does an outstanding job on domestic tax evasion. If you owe money to the Revenue Agency and you live in Canada and you bank in Canada, your chances of getting caught are extremely high. There are criminal charges, prosecutions and jail sentences,” Downe said. “But there hasn’t been one overseas tax evasion conviction.”

“There’s no penalty,” Downe said. “Nobody has gone to jail for this. The carpenter from Saskatchewan or the plumber in New Brunswick, it’s a different story. They’re shamed and charged and so on.”

https://www.thestar.com/news/world/2016/06/25/cra-has-double-standard-for-tax-cheats.html

 

[taxslave]

Your example is anecdotal. Not all wait staff make a $100.00 a day or there would be no churn in the restaurant biz. And even if she did make 100 a day and claimed it her tax rate would be around 30%. And let's not forget a very relevant aspect to a waitress; looks. Once a hotter one shows up, the higher tips migrate to the new one and the others eventually drop out of the biz.

And I know the rules about what can be written off against earnings very well and you would be surprised as to what can be done. The etcetera also includes dry cleaning, clothing purchases, partial residential property taxes and utilities if you have a home office, furnishing and equipment (including pencils and paper, staples, paperclips) for said 'home office', lawn care equipment and/or maintenance (if you use a service company) and other improvements to your home to maintain a high standard for your 'home office' and the list goes on.

Did I mention you can also write off 100% of 'accountant fees' ........?

Montreal-based clothing maker Gildan earned $396 million in profit last year, but paid just over $6 million in cash taxes — a rate of about two per cent.

Drug maker Valeant, based in nearby Laval, Que., booked $1.1 billion in profit in 2014 but paid only $110 million in tax.
It seems like a fiscal fantasy for Canadians used to personal income tax rates of up to 54 per cent. But both companies, and dozens more, did it completely legally, thanks in part to offshore tax havens.

In the last half-decade, deals the federal government enacted with offshore jurisdictions, ostensibly to allow the Canada Revenue Agency to crack down on tax evasion, have instead permitted tens of billions of dollars to flow into those locales, totally above board.

A joint CBC/Toronto Star investigation, as part of ongoing coverage of the Panama Papers, examined those international tax agreements and treaties and found an explosion of companies taking advantage of the tax opportunities the deals provide.

"Usage of tax havens have gone up significantly in the last five years," said Art Cockfield, a tax law expert and professor at Queen's University in Kingston, Ont.

In Gildan's case, much of the company's day-to-day operations — design, sales, manufacturing, customer service, marketing and distribution — are in Barbados.

The Caribbean country has been a darling of corporate Canada because it has had a tax treaty with Ottawa since 1980. The pact allows Canadian companies with subsidiaries in Barbados — there are more than 1,000 with offices there, including titans like Petro-Canada and Loblaws — to bring their offshore profits back home subject only to the low Barbadian income tax rate of between one and 2.5 per cent.

Valeant has also used a Barbados subsidiary to cut its tax bill. When it merged with Canadian pharmaceutical firm Biovail in 2010, Valeant CEO Mike Pearson pledged, "We'll figure out exactly how to take most advantage of this tax structure."

But serene, sun-kissed Barbados is being supplanted by other palm-fringed tropical paradises where the tax rates are even lower.

Since 2009, Canada has signed 23 tax information exchange agreements, or TIEAs, with tax havens from Aruba to Turks and Caicos.
Originally designed by the Organization for Economic Co-operation and Development to help make offshore havens more transparent, TIEAs are pacts that see those countries commit to handing over secret banking and other financial details to Canada as it tries to ferret out tax cheats.

Except Canada added a special twist: The then-Conservative government amended the tax rules to make every country Canada has a TIEA with into a new Barbados, giving companies the right to set up business there, earn profits that face little to no corporate tax, and then bring that money back tax-free.

"The tax havens were thrilled," Cockfield said, attributing the changes — which weren't part of the original intent — to successful corporate lobbying.

Since Canada started activating its TIEAs in 2011, huge sums of money — $55 billion — have legally flowed into those very tax havens.

The amount of Canadian money in zero-tax Bermuda has more than doubled since then, while about $20 billion has left Canada for the Cayman Islands. Those two countries together now have more Canadian investment than in Mexico, Brazil, China and Australia combined. Canada's big banks partake, too, and have branches everywhere from Anguilla to St. Lucia.


Deals Canada signed to catch tax cheats allow billions in taxes to escape - Business - CBC News

All legal so what's your point. These are not tax cheats. Waitresses not claiming tips and contractors working for cash are.

Do the Liberals have the nerve to fix the tax system?


It’s not often that the Business Council of Canada, the nation’s most important lobby for big business, sees eye-to-eye with the Canadian Centre for Policy Alternatives, the left-leaning think tank. So this should tell you something about the sorry state of our tax system: Both groups are pointing to the need for sweeping reform.

True, the Business Council is looking for a lower tax burden on businesses, while the Centre for Policy Alternatives is seeking a system that will increase redistribution from rich to poor. But both groups recognize that the current system is far too complex, confusing and riddled with loopholes — that it’s crying out for a radical overhaul.

Fifty years ago, in 1966, the Royal Commission on Taxation led by Kenneth Carter published its six-volume report outlining the need for reform of the Canadian tax system. Although its more progressive recommendations were watered down, it was the last time we had a systematic study of our tax system and what ails it.

Sophisticated tax avoidance operations like the Isle of Man scheme have many Canadians convinced that there’s one tax system for the rich and another, more onerous one for the rest of us. The need for tax reform has never been more urgent.

It’s time to do again what the Carter Commission did — analyze the system from top to bottom with the aim of simplifying tax law and making it more effective.

In February, the department published a comprehensive review of federal tax expenditures, tabulating the 200 or so separate preferential tax rates, exemptions, deferrals and tax credits that have turned the tax system into a maze of loopholes. Every time the government gives out a tax credit for some activity, or gives a tax break for another, it costs the treasury money. The total cost of these tax expenditures is a staggering $157 billion a year.

Eliminate these tax breaks for the few and you can reduce income taxes for all, or use the money to finance programs that actually do some good.

Finance Minister Morneau has promised a review of tax expenditures but, so far, he’s been coy about providing details. But the review shouldn’t stop there.

Do the Liberals have the nerve to fix the tax system?

False flag. Tax credits do not cost us anything. Useless government employees OTH do cost us tons so in a sence overhauling the tax system would make us money.

 

[tay]

All legal so what's your point. These are not tax cheats. Waitresses not claiming tips and contractors working for cash are.

False flag. Tax credits do not cost us anything. Useless government employees OTH do cost us tons so in a sence overhauling the tax system would make us money.

The point is that those who are 'well connected' get tax benefits that the peons are not entitled to. They don't consider themselves 'taxslaves'.

And if Tax Credits cost nothing, why are they offered..........?

Two banks have agreed to give the federal revenue minister information from the accounts of a Caribbean financial institution to help the government crack down on Canadian tax evaders.

The Federal Court of Canada has approved federal requests for seven years' worth of transaction information from the Royal Bank of Canada and Citibank, N.A., related to accounts in the name of Cayman National Bank Ltd.

In an affidavit filed with the Federal Court, David Letkeman, an auditor with the agency's offshore compliance section, says past investigations have confirmed that Canadian residents use accounts with foreign financial institutions to hide taxable income.

"In my experience, the expectation of such persons is that the CRA would not discover the entities, accounts and omitted income."

In this case, the revenue agency has not yet identified Canadians suspected of an offshore tax dodge.

Walters said the latest court actions are unrelated to the so-called Panama Papers trove of leaked data, which exposed the offshore dealings of many high-profile people around the globe.

Federal court orders 2 Canadian banks to hand over Cayman bank info to CRA - Business - CBC News

 

[tay]

Marco Chown Oved reports that for all the tax avoidance acquiesced in by far too many countries, Canada is lagging far beyond even its international peers in prosecuting offshoring:

As worldwide pressure grows to fight offshore tax evasion, new statistics obtained by the Star show the Canadian government has convicted only 49 people and levied just $13.4 million in fines for what it calls offshore activity since 2010.

These numbers are far lower than in comparable countries and show the Canada Revenue Agency recovers only a tiny fraction of the estimated $6 to $7.8 billion in taxes Canada loses to offshore tax havens each year.
...
The Panama Papers leak has detailed how the use of shell companies in tax havens deprives public tax coffers of billions of dollars each year. While other governments have devoted significant resources to cracking down on bank secrecy and offshore tax schemes, Canada’s efforts appear to have paled in comparison.

Australia’s Project Wickenby has collected more than $600 million from cheats using tax havens since 2006. The U.K. has recouped more than £2 billion ($3.5 billion) from offshore tax evasion since 2010.

In contrast, Canada has only handed out fines totalling $13.4 million since 2010 — less than half the $35.7 million in taxes the cheats were caught evading.

“This doesn’t make any sense,” said tax lawyer Jonathan Garbutt. “The law states that the minimum fine for tax evasion must be 50 per cent of the amount of tax owing. And judges often fine 75 or 100 per cent.”

https://www.thestar.com/news/world/...action-of-offshore-tax-evaders-exclusive.html




​

 

[tay]

Canadians have little hope of seeing the issue of tax evasion or aggressive tax avoidance being addressed seriously

It seems like every year a new tax haven scheme is revealed, provoking the ire of Canadians... only to fade from the news a few months later.

In 2008, tax evasion schemes involving the Swiss bank UBS and the Liechtenstein's LGT bank were revealed, and quickly relegated to the back pages. It was followed by more leaks, the last in date, involving the KPMG scheme at the Isle of Man and the Panama Papers.

Last spring, the NDP pushed through a motion to study more specifically the KPMG tax scheme involving the Isle of Man, where the tax consulting firm hatched a plan to create empty shell corporations in the British territory, implemented 15 plans involving 25 Canadians who made tax-free "donations" to the offshore companies.

The CBC/ICI Radio-Canada investigation demonstrated that these companies produced nothing and provided no services. But they gradually gifted the money back to these individuals, sums that were never declared to the Canada Revenue Agency.

Court documents suggest that KPMG was paid a commission of up to 15 per cent of the tax dodge for each of these individuals (KPMG admitted to taking a flat rate of $100,000 for each of the 15 plans).

Shockingly, when the CRA caught wind of the scheme, it offered its beneficiaries a sweetheart deal with no penalties.

The five meetings held by the Finance Committee on this topic were frustrating to the extreme. It was next to impossible to get meaningful answers from either KPMG representatives (hiding behind attorney-client privileges) or the Canada Revenue Agency (hiding behind privacy concerns), while the Canadian government seemed to do its best to claim that everything was mostly fine, the rest was being taken care of.

These testimonies did little to assuage the doubts. Take for example the question of the CRA letter of amnesty/settlement to the alleged tax evaders.

Stephanie Henderson, manager of the Canada Revenue Agency's Offshore Compliance section, signed an offer made to Canadians who benefited from KPMG's tax evasion scheme to the Isle of Man to repatriate their funds to Canada while only paying the amount owed in taxes, without any penalty.

When Canada's National Revenue Minister, Diane LeBouthillier, appeared at the Finance Committee on May 19, alongside Ted Gallivan, Assistant Commissioner, International, Large Business and Investigating Branch, I asked them about this letter. This question led to a completely surreal exchange in which they were unable or unwilling to confirm the authenticity of the document.

Liberal and Conservative members of the Finance Committee seem to have little appetite to pursue the matter any further and the committee will release its report this fall, and will move on to something else.

KPMG is before the Tax Court of Canada, pleading that this tax scheme was legitimate. The government brought the matter before the Federal Court of Canada to try to get the name of those who benefited from the scheme. Both of those cases are not expected to be ruled upon before 2017, and possibly as late as 2019.

These court cases are used as a justification for parliamentarians not to investigate this specific scheme, because it could "interfere" with ongoing legal proceedings. It certainly impeded the ability of the committee to get answers.

As long as politicians will be timid and fearful of using their power, Canadians have little hope of seeing the issue of tax evasion or aggressive tax avoidance being addressed seriously by their politicians.

video

Tax Evasion Will Persist Until Parliament Hill Steps UpÂ*|Â*Guy Caron

 

[Walter]

Sunny ways.

 

[Remington1]

Canadians pay 42% of their income in tax, that is more than food, roof and essentials like cloths combined. Tax is now the highest expenditure for a family. Think of just one day-- taxes paid (property, gas, cars, alcohol, food, etc.....) I wonder if we get back as much as we give? Do we get our return on our Health Care system? We are going to get higher taxes very soon, that is how are we going to handle our deficit? We still live very good in Canada, but taxes are taking away our hard earn money, which could be used for our kids education, new toys, more time with the family, etc...

 

[MHz]

I'm thinking the next Board meeting would have a few vacant chairs as the main reason.

 

[tay]

Canadians pay 42% of their income in tax, that is more than food, roof and essentials like cloths combined. Tax is now the highest expenditure for a family. Think of just one day-- taxes paid (property, gas, cars, alcohol, food, etc.....) I wonder if we get back as much as we give? Do we get our return on our Health Care system? We are going to get higher taxes very soon, that is how are we going to handle our deficit? We still live very good in Canada, but taxes are taking away our hard earn money, which could be used for our kids education, new toys, more time with the family, etc...

As you have seen in this thread, not all Canadians pay high taxes, if they pay taxes at all.....



Guy Caron points out that international tax agreements which should serve to facilitate enforcement are instead allowing the 'connected' to evade meaningful taxes

The issue of tax havens is inherently international in scope. As a result, the government can use tax agreements to fight tax avoidance schemes.

Unfortunately, tax agreements haven't been used for that purpose. On the contrary, they have facilitated the outflow of Canadian money to offshore financial centres, and have done very little to break the damaging secrecy laws of these countries.

Tax agreements were first signed by Canada in 1980 and to date, Canada has signed 92 of them. Ten more are currently being negotiated or are waiting for ratification. Their alleged objective is to avoid double taxation of corporate profits or personal income.

For example, if Canada has a tax rate of 26 per cent on corporate profits, and a different country where a company does business has a 14 per cent tax rate, the tax agreement ensured that the profits earned in that foreign country wouldn't be taxed at a total of 40 per cent. It is first taxed in the country it was earned, and a credit is applied on Canadian taxes upon repatriation of these profits.

This would make financial sense... if tax agreements were used this way.

But instead of simply deducting the taxes paid in another country upon repatriation of the profits, Canada fully exonerates the repatriated profits, regardless of the tax rate of the foreign country.

A Canadian company that establishes a subsidiary in Barbados to channel its international profits will only have to pay the 2.5 per cent tax rate of that country and will be allowed to repatriate these profits tax-free to its Canadian headquarters.

In short, tax agreements don't only eliminate the double taxation of profits: they allow these profits to be barely taxed at all!

Tax Information Exchange Agreements (TIEAs) are the next generation of tax agreements. They were proposed by the OECD in its Model Tax Convention of 2005, as a response to the growing concerns regarding tax evasion and the banking secrecy of tax havens
.
Their alleged purpose was to provide signatory countries with the ability to request information about the financial activities of its citizens in another jurisdiction.

TIEAs gained popularity when the OECD created a "grey list" of tax havens in 2008, which required, that any identified tax havens sign 12 TIEAs worldwide in order to be removed from this list.

It didn't present much of a difficulty. For example, the Cayman Islands signed 18 TIEAs between 2009 and ‎2011, mostly with other tax havens. In other words, tax havens helping tax havens to no longer be blacklisted.

Canada ratified its first TIEA on January 4, 2011, with the Netherlands Antilles and has ratified 21 other TIEAs since then, mostly with jurisdictions that are widely considered tax havens, such as the Isle of Man, the Cayman Islands and the Turks and Caicos.
But TIEAs haven't been working, for three main reasons.

First, in most cases, the information has to be requested. TIEAs do not generally provide for automatic exchange of information.

Second, TIEAs forbid any fishing expedition. To get information from the tax authority of the Cayman Islands, the Canada Revenue Agency must provide not only the name of the person it investigates, but also the "name and addresses of any person believed to be in possession of the requested information."

For example, if the CRA knows that a Canadian has undeclared money in a Cayman Islands banking institution, it has to know which of the 280 Cayman banks holds that money upon making its request.

In other words, this supposed tool to help investigations requires that the investigation already be completed.

Third, the tax havens do not have the obligation of finding the information they do not already collect.

For example, an individual can create a company in the British Virgin Islands without having to provide the names of the shareholders or directors and without having to maintain financial records. So if the CRA requests information on a Canadian suspected of funnelling money in an offshore trust company, tough luck: the request will be declined.

But if that wasn't enough, Stephen Harper's Conservatives actually introduced a change in the tax code in 2007 that allowed a company doing business with a TIEA partner to bring back the profits, tax-free.

Tax agreement will be nothing more than smoke and mirrors so long as they don't require automatic exchange of information between countries.

Worse, these agreements simply legitimize the unfair situation.

The solution is also international in scope, but instead of simply playing along in this rigged game, Canada should play a leadership role at global forums such as the G-7, the G-20, the OECD and the UN to change them.

Such action is necessary to ensure the future of our democratic systems. Without fairness, there cannot be trust in the fundamental institutions of our societies.

Tax Agreements: From Double Taxation To Double EvasionÂ*|Â*Guy Caron

 

[tay]

Donald Trump’s contention that it is “smart” not to pay your fair share of taxes has provoked public outrage. But many Canadian multinationals incorporate that mantra into their business plans.

And next week one of them is going to Tax Court.

Cameco, a giant resource company based in Saskatoon is being charged (link is external) by the Canada Revenue Agency with evading at least $2.2 billion in taxes over the past decade. The CRA alleges that Cameco set up a subsidiary in Switzerland expressly to reduce its taxable income. The CRA also charges that the uranium producer engages in transfer pricing – essentially a shell game of one part of the company invoicing another to reduce taxable income in Canada.

The CRA investigation has been going on for years and it has been a long road to bring it to trial. Cameco is also under investigation by the US’s Internal Revenue Service for the same practices.

“This is an incredibly important and precedent-setting case for Canadians,” says Dennis Howlett, executive director of Canadians for Tax Fairness. “Shifting profits offshore hurts our economy and damages faith in our tax system. We’re hoping this is the start of a sea-change.”

Multinationals engaging in this practice gamble that the complexity and expense of the investigation means that the risk of getting caught is low, says Howlett. Last year’s federal budget earmarked an additional $444million over five years to the CRA’s budget.


Observers hope that it will turn up the heat on tax-dodging corporations.

But Howlett says the government also has to be more strategic in setting down ground rules. “The Canadian government needs to reform corporate tax rules and stem the revenue losses due to corporate profit shifting,” he says in a brief to the Parliamentary Finance Committee.. “Requiring economic substance for any offshore subsidiary to be recognized as a separate corporate entity for tax purposes would be a good start. Bill C-621 (link is external), introduced in the last parliament provides a good legislative example of how this could be done. This one measure could raise $400 million a year and make the rules clearer.”

Earlier this year Canadians for Tax Fairness teamed up with its Saskatchewan counterpart and delivered a 35,000-name petition (link is external) to the Prime Minister’s office and to the Cameco executive offices.

“Cameco has a corporate responsibility to pay the $2.2 billion,” says Don Kossick, the creator of the petition and a C4TF Board Member. “They use Canadian-developed technology to dig Canadian uranium out of the Canadian ground and rely on the Canadian transportation system to bring their product to market. Cameco employs Canadian workers who developed their knowledge and skills in Canadian schools, rely on Canadian hospitals if / when they get sick and rely on the stability and legal protection that Canadian democracy provides. Canadians are exasperated with this shell game.”

Kossick worries that there is still a chance that Cameco will settle out of court and Canadians will never hear the real story. He also lays some of the blame on provincial policies.

“Premier Brad Wall has said nothing to protect the interests of Saskatchewan people. The monies owed by Cameco could easily covered the deficit that has now resulted in major cuts to health, education and human services in Saskatchewan.”

The trial is due to start October 5 in Toronto. A decision isn’t expected until mid-2017.

Tax Court Battle: The People vs Cameco | Canadians for Tax Fairness

 

[Curious Cdn]

Maybe, some of the cheats work for the CRA.

 

[captain morgan]

Donald Trump’s contention that it is “smart” not to pay your fair share of taxes has provoked public outrage. But many Canadian multinationals incorporate that mantra into their business plans.

Exactly what is fair share?

 

[Curious Cdn]

Exactly what is fair share?

It sure as hell is not "nothing".

 

[captain morgan]

Great.... So we've established that fair share is not nothing in taxes.... So, what is fair share then?