Thursday, October 7, 2010
Harper’s Conservatives
Soft on Tax Evasion
Charlottetown Senator Percy Downe was surprised to learn that the Conservative Government is making little to no progress at recouping unpaid tax dollars from the coffers of Canadians with undeclared bank accounts in Liechtenstein. Downe first became aware of the situation in late 2008, and subsequently filed his first in a series of Written Questions in the Senate in January 2009.
Four years ago, the Canadian government was given by the Government of Germany the names of 106 Canadians with over $100 million dollars in bank accounts in Liechtenstein.
“Unlike the United States, Germany and other countries that moved aggressively and rapidly to recoup any unpaid taxes that were owed, Canada took another tactic: strong words promising action, but little effort to make recovery of unpaid taxes a priority,” said Downe.
For example, then Revenue minister Jean-Pierre Blackburn said in late 2009, "People realized that it's a question of time before we get them," (…) "I tell them, 'We'll get you, we'll find you.'” (Times - Colonist. Victoria, B.C.: Dec. 3, 2009) Earlier in the year, he called tax evasion “a huge problem for this country,” and vowed “If somebody owes us something, we have to get it.”(Saskatoon Star Phoenix, Feb.19, 2009). Minister Blackburn predicted almost $20 million dollars in recovered taxes (CBC News, Dec. 14, 2009).
In the year since Canadians were given these reassuring promises, Downe learned in the response to Written Questions tabled this fall that:
- The Government has completed 26 cases, including those of 20 residents of Canada who came forward under the Voluntary Disclosure Program (VDP).
- It has “assessed” $5.2 million in back taxes, interest and penalties.
- This $5.2 million has not been collected; it is merely what the government claims it is owed.
- No one has been charged with tax evasion. No one.
- Other countries, such as the United States and Germany, have laid tax fraud charges on individuals for having undeclared bank accounts in tax havens.
The Voluntary Disclosure Program is also noteworthy. There are reports in the media (Tax collectors to relax rules for confessing secret accounts, Globe and Mail, July 15, 2010) that the Government is weakening the provisions of the Program allowing those who come forward to keep more of their gains than was previously permitted. This would explain an apparent discrepancy in recent statements about the Liechtenstein affair. In the Commons (April 27, 2009, Question No.76), Minister Blackburn stated that no one among the Canadian holders of Liechtenstein accounts had, or was eligible to come forward under the VDP. However, in the written response tabled in Parliament this fall, the Government has stated that twenty people had benefitted from the VDP. Clearly an explanation is in order.
“Canadians using banks in our country pay all of their taxes. Why are Canadians with foreign bank accounts – some containing millions of dollars – getting a tax holiday under this government? Who is being protected?” asked Downe.
A final note: if the 1,785 Canadian-owned Swiss accounts that have recently been publicly disclosed are reviewed as quickly as the 106 from Liechtenstein, it will take just over 274 years to go through them all (based on 26 completed cases in four years.).
“Canadians have serious questions about the competence of the Federal Government if these are the results after four years,” concluded Downe.
Attached below:
a) Written Question filed by Senator Downe, March 3, 2010
b) Response from the Government
c) Written Question tabled in the Senate by Senator Downe, October 6, 2010
d) Hansard regarding Response from then Revenue Minister Jean-Pierre Blackburn, April 20, 2009
Senate of Canada
Written Questions
By the Honourable Senator Downe:
March 3, 2010—With respect to possible tax evasion:
In 2006, German authorities advised the Government of Canada of the names of Canadians with bank accounts in Liechtenstein.
A. Could the Government of Canada provide the following information:
i. How many Canadians have been identified as having undeclared bank accounts in Liechtenstein?
ii. How many identified Canadians with accounts in Liechtenstein have availed of the voluntary disclosure program with the Canada Revenue Agency (CRA)?
iii. How many identified Canadians with accounts in Liechtenstein have settled with the CRA?
iv. Based on the information about Liechtenstein bank accounts, how many Canadian account holders have been charged with tax evasion?
v. How much money, including unpaid taxes, fines, etc., has the CRA recovered as a result of investigating these secret bank accounts in Liechtenstein?
B. Could the Government of Canada summarize what action, if any, has been taken by Canadian officials to recover unpaid taxes associated with Canadians' undeclared bank accounts in Liechtenstein?
Reply by the Minister of National Revenue, Keith Ashfield
The response from the Canada Revenue Agency (CRA) is as follows:
Since receiving the names of the residents of Canada identified as having bank accounts in Liechtenstein, the CRA is continuing compliance actions on all originally identified taxpayers related to the Liechtenstein accounts. Twenty-six audit cases have been completed.
The CRA is continuing to work collaboratively with other countries to address the abusive use of tax havens, aggressive tax planning and many other instances where taxpayers may be conducting affairs aimed at tax avoidance and evasion. As part of this work, the CRA continues to exchange information with other countries as permitted by legislation and tax treaties.
As a participation member of the Organization for Economic Co-operation and Development (OECD), Canada actively seeks ways to effectively deal with the abusive use of tax havens.
The CRA is also an active member of the Joint International Tax Shelter Information Centre (JITSIC) and the Seven Country Working Group on Tax Havens.
• Based on information provided to the CRA, as of June 10, 2010, 106 residents of Canada who have accounts in Liechtenstein have been identified.
• As of June 10, 2010, 20 residents of Canada who have accounts in Liechtenstein have availed themselves of the CRA’s Voluntary Disclosures Program.
• Up to June 10, 2010, of the 106 identified residents of Canada with accounts in Liechtenstein, 26 cases have been completed involving 68 individuals.
• No Canadian account holders have been charged with tax evasion.
• As of June 10, 2010, the CRA had reassessed 26 cases involving 68 individuals for a total of approximately $5.2 million in federal tax, interest and penalties. With the exception of files under appeal, all taxpayers have paid in full or made substantial payments against outstanding balances.
Senate of Canada
Written Questions
By the Honourable Senator Downe:
October 6, 2010 – With regard to possible tax evasion in Liechtenstein, also known as “Project Jade”:
As of June 10, 2010, the Canada Revenue Agency (CRA) was informed about 106 residents of Canada who have over $100 million dollars in accounts in Liechtenstein, and had reassessed 26 cases for a total of approximately $5.2 million in unpaid federal taxes, interest, fines and penalties.
1. What is the breakdown of the $5.2 million assessed from the 26 cases, specifically:
a. in unpaid taxes;
b. in interest;
c. in fines; and
d. in penalties?
2. How much of the $5.2 million has been collected?
3. How many of these cases are under appeal?
4. How many cases remain open?
5. How many of the 26 cases have been closed, i.e. the full amount of taxes, interest, fines and penalties have been collected?
a. What is the breakdown (money collected in taxes, interest, fines and penalties) for each case?
6. How many of the account holders in the 26 cases have made partial payment?
7. Of the partial repayments made:
a. What was the largest amount?
b. What was the smallest amount?
c. What was the average amount?
8. How much does CRA anticipate it has yet to collect, in taxes, interest, fines and penalties?
9. With regard to the amount of money contained in the Liechtenstein accounts declared or discovered by the CRA:
a. What was the largest amount?
b. What was the smallest amount?
c. What was the average amount?
10. On what date was the CRA first made aware of the names of Canadians with accounts in Liechtenstein?
11. On what date did CRA begin its investigation?
12. On what date did the first audit of an individual account holder begin?
13. Of the 106 original identified Canadians with bank accounts in Liechtenstein, how many Individuals have had these accounts audited, reassessed or been the subject of compliance action?
14. How many of the 106 account holders have not been audited, reassessed or been the subject of compliance action?
15. How many tax evasion charges were laid?
OFFICIAL REPORT (HANSARD)
House of Commons
Monday, April 20, 2009
Question No. 76--
Hon. John McCallum:
Regarding the Government of Germany’s use of an informant to ascertain the names of foreign investors holding accounts with the Liechtenstein LGT Group:
(a) did the Government of Canada pay any sum of money to the Government of Germany, or any other government, to obtain the identity of the Canadian citizens or residents whose name appeared on that list and, if so, how much;
a) The confidentiality provisions of the acts administered by the Canada Revenue Agency, CRA, do not permit it to provide details of cases that it may or may not be reviewing or the sources of its information. However, the CRA can advise that as a matter of policy and practice it does not pay for informant information.
(b) without breaching the privacy rights of any individual, how many Canadian names appeared on that list;
b) For the reason stated in part a), the CRA cannot comment on accounts held with a particular financial institution with such particularity. However, based on information provided to the CRA, over 100 individuals have been identified as being residents of Canada and having assets in the Principality of Liechtenstein.
(c) is the Canada Revenue Agency (CRA) granting those individuals who are listed the opportunity to pursue a voluntary disclosure;
c) The role of the CRA is to ensure that all taxes are paid in full. The voluntary disclosures program, VDP, promotes compliance by encouraging taxpayers to voluntarily correct previous omissions in their dealings with the CRA. A requirement of the VDP is that taxpayers must make a full disclosure before the CRA commences any compliance action or investigation. If they do so, they may only have to pay the taxes owing, plus interest, but not face penalties or prosecution in the courts.
As compliance action has been commenced on all of the listed taxpayers, they are no longer eligible for consideration under the VDP.
(d) if the answer to (c) is yes, will, or have, individuals who approached the CRA only after media reports surfaced about the breach of privacy at the LGT Group be considered eligible for a voluntary disclosure;
d) n/a
(e) if the answer to (d) is yes, is it the policy of the CRA to allow tax payers to avail themselves of the voluntary disclosure program once they could reasonable be aware that the CRA may be pursuing an audit;
e) n/a
(f) how many of the listed individuals have approached the CRA with a voluntary disclosure;
f) None.
(g) how many individuals has the CRA begun to audit from the list of LGT Group clients; and
g) For the reason stated in part a), the CRA cannot comment on accounts held with a particular financial institution with such particularity. However, based on information provided to the CRA, over 100 individuals have been identified as being residents of Canada and having assets in the Principality of Liechtenstein. Compliance action is either ongoing or has been completed on all individuals.
(h) how many individuals has the CRA begun to prosecute from the list of LGT Group clients?
h) For the reason stated in part a), the CRA cannot comment on accounts held with a particular financial institution with such particularity. No Canadian taxpayers included in the group of over 100 individuals identified as being residents of Canada and having assets in the Principality of Liechtenstein have been charged with tax evasion.
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