The Canada Revenue Agency’s (CRA) criminal probe into an offshore tax avoidance scheme run by the accounting firm KPMG has cleared KPMG “of any wrongdoing.”.“KPMG fully and voluntarily cooperated with a thorough investigation. The investigation concluded and KPMG was cleared of any wrongdoing,” said KPMG spokesperson Tenille Kennedy..The KPMG scheme let wealthy Canadians receive tax-free investment income back from an offshore account in the Isle of Man tax haven as a “personal gift” to themselves..For the multi-millionaires involved in the scheme, it allowed them to evade tens of millions of dollars in taxes and hide their fortunes in the Isle of Man..The scheme made it appear that the wealthy Canadians had given their fortunes to anonymous Isle of Man shell companies..The Isle of Man scheme started in 1999 and the CRA argued in court documents that the scheme “intended to deceive” the government to avoid paying taxes..The CRA investigation results were not shared with the public and it finished over a year ago..Revenue Minister Diane Lebouthillier said in 2017 that the CRA would get to the “bottom of the matter” and make public the findings of the investigation..“We’re going to go all the way and we’re going to catch them. When everything comes out publicly, it’s going to be simpler,” Lebouthillier told Radio-Canada in March 2017..Lebouthillier said the investors and KPMG were both being criminally investigated. .“Indeed, because for those involved in setting up a scheme, that is also criminal,” said Lebouthillier in 2017..During an interview last week, Lebouthillier said she could not talk about the investigation according to the terms of the Income Tax Act..“I can’t speak to any particular case,” said Lebouthillier..“The agency investigates all kinds of files. Once cases are put together, (the CRA) works with the Justice department to determine whether the cases are brought to court or not.”.Gregory Wiebe, a KPMG executive, told a parliamentary committee in 2016 that this “investment strategy” complied with laws in place at that time..“We’ve taken the position that the specific Isle of Man structure is not compliant,” said Ted Gallivan, who is now a senior official at the Canada Border Services Agency..Wiebe said they had not used the Isle of Man tax arrangement since 2003 and KPMG made $1.6 million in fees off of setting up the arrangement..Wiebe said KPMG had “fully complied with all applicable tax laws” in effect from 1999 to 2003..In 2013, Harper’s Conservative government tightened the tax shelter rules and that significantly changed how tax shelters could be used..KPMG now reviews any tax saving plans for “reputational” risk and to make sure any plan is legal and complies with anti-avoidance tax rules.
