Most CRA convictions cited by government are not for offshore tax evasion

Few, if any, of the court cases that Prime Minister Justin Trudeau’s government has cited in Parliament to defend its record on cracking down on offshore tax evasion have anything to do with millionaires hiding money in offshore tax havens, a review by CBC News has found.

Cases more likely to involve tax protesters or small business people with undeclared income

National Revenue Minister Diane Lebouthillier has repeatedly defended the government's efforts to crack down on offshore tax evasion. But few, if any, of the court cases the government has cited in Parliament have anything to do with millionaires hiding money in overseas tax havens, a review by CBC News has found. (Justin Tang/Canadian Press)

Few, if any, of the court cases that Prime Minister Justin Trudeau's government has cited in Parliament to defend its record on cracking down on offshore tax evasion have anything to do with millionaires hiding money in overseas tax havens, a review by CBC News has found.

In fact, Canadians convicted of tax evasion over the past two years are far more likely to be tax protesters or small business people who failed to declare all of their income.

The review by CBC News of the list of cases provided by the Canada Revenue Agency also reveals that while the government has talked about 78 convictions, there have only been 49 separate court cases.

In its list of 78 convictions between September 2015 and October 2017 provided to CBC News, the CRA counted each article of the law as a separate conviction.

For example, in the case of New Brunswick-based George's Heating and Plumbing, the agency counted two charges against the business as separate convictions, in addition to the convictions of five employees for having treated personal expenses as business expenses. While they were all part of the same case with the same court file number, on the CRA's list they counted as seven of the 78 convictions.

The total of 78 has been cited most often by National Revenue Minister Diane Lebouthillier. But Trudeau and Lebouthillier's parliamentary secretary, Kamal Khera, have also quoted it in their responses to charges that the government wasn't doing enough to combat offshore tax evasion.

However, the review by CBC News of the list of convictions, which used a combination of CRA press releases, news stories and court files, did not find any references to convictions resulting from offshore tax evasion.

Canada Revenue Agency officials say some of the 78 convictions have links to money or assets offshore but refuse to say how many. (Sean Kilpatrick/Canadian Press)

The government has come under fire during question period in recent weeks in the wake of the release of the Paradise Papers, yet another massive leak of confidential information shared with the International Consortium of Investigative Journalists (ICIJ).

The news stories that have resulted from the Paradise Papers and their predecessor, the Panama Papers, have sent shock waves around the world and shed new light on the use of offshore tax havens by some of the world's wealthiest individuals, often to hide assets or reduce their tax bills.

Confronted by opposition questions about the government's efforts to crack down on wealthy Canadians who avoid taxes by keeping money offshore, Lebouthillier has repeatedly argued that the CRA has made progress.

"Our government is fully committed to fighting tax evasion and aggressive tax avoidance," she said Oct. 9.

"In our last two budgets, we allocated nearly $1 billion to doing just that. Our plan is working. There have been 627 cases transferred to criminal investigation, 268 search warrants executed and 78 convictions."

The CRA is also conducting 990 audits and 42 criminal investigations, she often adds.

The CBC News review was confined to the convictions, for which public information was available.

P.E.I. Senator Percy Downe says the government's answers in the House of Commons initially led him to believe the 78 convictions they cited were for offshore tax evasion. (CBC)

While Lebouthillier's answers were to questions about offshore tax evasion, John Power, spokesman for the minister, said she was referring to the CRA's overall efforts to fight tax evasion.

"We have not stated that there were 78 convictions for offshore tax evasion."

Asked about the CBC News findings, CRA officials said some of the 78 cases have links to money or assets held offshore, but they refused to say how many, citing confidentiality. They said CRA can only provide details that are presented in court and are part of the public record.

"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 or link such details to a taxpayer."

The review by CBC News found that tax protesters who believe that "natural persons" don't have to pay taxes were the single largest category of those convicted. Nine people, several of whom worked with the Paradigm Education Group, accounted for 11 of the convictions cited by the government.

Conservative Revenue critic Pat Kelly says Lebouthillier lacks credibility. (Christian Diotte, House of Commons)

Some of the convictions were the result of investigations into other crimes. For example, four Vancouver convictions for tax evasion began as an investigation into an immigration fraud scam. One 2016 Calgary conviction flowed from an investigation into a butcher on allegations of bookmaking and drug dealing.

The rest are often business people or tax preparers who failed to report all their income or failed to turn over sales taxes they had collected.

Sen. Percy Downe, who has been calling on the government to do a better job fighting offshore tax evasion, said Lebouthillier's answer initially led him to believe there had been 78 convictions for offshore tax evasion. He began to wonder when questions emerged about her claim that CRA had recovered $25 billion in unpaid taxes.

"The CRA is terribly ineffective in overseas tax evasion and they have become very misleading to Canadians — trying to create the impression that they're doing something that they're not doing."

Conservative Revenue critic Pat Kelly said he is not surprised that few, if any, of the convictions cited by Lebouthillier have to do with offshore tax evasion.

"There are tremendous credibility problems with this minister and the answers she has given in the House to any of a variety of questions about her department, so it would come as no surprise to me if this is just a made-up number or a number that is definitely misleading in the context of going after tax evaders in offshore tax havens," Kelly said.

New Democratic Party Revenue critic Pierre-Luc Dusseault said Lebouthillier should clarify her comments and reveal how many of the convictions she cites have anything to do with offshore tax evasion.

"The minister should come clean and be very transparent."

Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca

About the Author

Elizabeth Thompson

Senior Reporter

Award-winning reporter Elizabeth Thompson covers Parliament Hill. A veteran of the Montreal Gazette, Sun Media and iPolitics, she currently works with the CBC's Ottawa bureau, specializing in investigative reporting and data journalism. She can be reached at: elizabeth.thompson@cbc.ca.

With files from Max Paris

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