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Christopher Reynolds
June 21, 2021
The lack of prosecutions follows more than 6,770 audits of ultra-wealthy Canadians over the past six years.
“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.
The absence of criminal prosecutions against high-net-worth residents comes in an era of rising wealth inequality, a disparity laid bare by the COVID-19 pandemic.
OTTAWA — 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 convenes to discuss the CRA’s attempts to combat tax evasion and avoidance. Diane Lebouthillier, minister of national revenue, is slated to appear before the panel Tuesday afternoon.
A spokesman for the minister’s office referred questions to the CRA, which did not respond immediately to requests for comment.
Denis Meunier, former deputy director of the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac, 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.
“You need a search warrant to go kick in — well we don’t kick in doors, but you knock on them.”
Often tax evasion 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.
Continue with story: https://www.timescolonist.com/news/cra-audits-of-ultra-wealthy-canadians-yield-zero-prosecutions-convictions-1.24333851