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The Canadian Revenue Agency has settled with a number of individuals involved in an offshore tax avoidance scheme on the Isle of Man.
The case involved KPMG, one of the top accounting and auditing firms in Canada and 20 wealthy families. KPMG funneled the funds of the clients to unknown overseas shell companies and returned their money as tax-free gifts.
Approximately tens of millions of dollars worth of taxes were avoided by the organization’s wealthy clients through the scheme which operated as far back as 1999.
Despite the operation being a direct violation of Canadian tax law, the Canadian Revenue Agency has reached a settlement with the individuals involved.
Due to federal regulations around taxation, the total extent of the scheme cannot be revealed to the general public but it is believed that KPMG intended on receiving a 15 per cent cut from the taxes avoided.
Back in 2017, the Liberal government promised to put its foot down on tax avoidance.
“Tax cheats can no longer hide,” said National Revenue Minister Diane Lebouthillier “Those who choose to participate in these schemes must face the consequences of their actions.”
However, recent revelations show that in 2015, the CRA offered amnesty to several KMPG clients involved in the scam where they would have to pay the amount of taxes they avoided back to the government without penalty.
The CRA maintains that the decision to settle was the most cost-effective and revenue inducing option for Canadians.