How accounting firm KPMG helped wealthy Canadians dodge their taxes
A parliamentary inquiry into the role KPMG played in helping wealthy Canadians avoid paying taxes was much less aggressive than a U.S. Senate investigation in a KPMG tax avoidance scheme that helped Americans evade paying taxes.
That was one of the conclusions of an investigation into the accounting giant KPMG by the CBC's fIfth estate which airs March 3.
The difference between the two investigations "was night and day," says Harvey Cashore, the senior producer of CBC's special investigations unit who produced the fifth estate documentary.
"You began with the same idea which was let's investigate the facts behind what happened. And very early on in the Canadian inquiry, and this is a parliamentary inquiry, you see the KPMG witness refuse to answer the question about who he talked to at the CRA (Canadian Revenue Agency), or the KPMG talked to. And that question was allowed to go unanswered," Cashore tells The Current's Anna Maria Tremonti.
According to Cashore, the Parliamentary finance committee was to look into a scheme that was set up by KPMG where wealthy clients gave away millions of dollars as gifts to the Isle of Man and then received the money back as gifts. As a gift it was not taxable.
The CRA alleges that the scheme was a "sham" and that the clients, in reality, never gave away their money.
The committee was also supposed to look into a "sweetheart deal" between KPMG clients and the Canada Revenue Agency whereby those who used the scheme could pay the taxes owed, without any penalty.
A key provision imposed by the CRA was that the terms of the deal be kept secret from the public.
Cashore says when he received a copy of the secret deal between the CRA and KPMG's clients in a brown paper envelope, and publicized, it caused a stir in Ottawa.
"People were wondering, does the CRA have a double standard here?" Cashore tells Tremonti.
"When you go on the CRA website you see handcuffs. They say you are going to jail if you commit tax evasion and then you see this secret deal to KPMG clients which is, we will offer you this no penalties offer ... but please don't tell the public."
The fifth estate's documentary, The Untouchables airs March 3, at 9 p.m.EST on CBC TV.
Listen to the full segment at the top of this web post.
This segment was produced by The Current's Howard Goldenthal.