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Tax agency auditors overwhelmed by tax giants: union

Tax agency auditors overwhelmed by tax giants: union

Canada Revenue Agency officials are “overwhelmed” by “tax giants” when it comes to cracking down on extraterritorial tax cheats, union leader representing CRA auditors said Thursday to deputies.

Debi Daviau, President of the Professional Institute of the Public Service of Canada (PIPSC), said her members are passionate about their work, but they need a better structure and the right tools to do their jobs.

“Our CRA professionals are among the best in the world at what they do, but they face great challenges,” Daviau told a member of the House of Commons finance committee. “Their job is to attack individuals and entities who, in fact, have unlimited resources and can aggressively exploit legal and international gray areas for their own benefit.

“CRA employees, by comparison, often feel overwhelmed by those who try to avoid taxes the most.”

Daviau said the CRA unit, which specializes in very complex structures of international tax evasion and fraud, was disbanded several years ago and its members reassigned to other, more generalized groups.

“This has reduced the ability of CRA employees to be able to ensure that international tax avoiders pay their fair share,” she said.

As a result, Daviau said, the CRA has better resources to catch tax evaders in Canada than it does to prosecute those who have put in place elaborate international tax evasion schemes.

‘Precarious positions’

“The employees of the Canada Revenue Agency are grappling with the tax giants,” she told MPs. “These are people who have immense skills, technology, expertise and other great companies on their side, so they have to be on an equal footing.”

Daviau said an important step in improving the situation would be to ensure better protection for whistleblowers.

“ARC officials are frequently placed in precarious situations where they are asked to hold powerful players to account in a high-stakes environment,” she said. “Whistleblower protection is critical to ensuring professional integrity during the tax assessment process.”

The government should reduce practices such as transfer pricing – which see companies reporting profits on products in low-tax jurisdictions that have little to do with production – and implement the register of beneficial owners promised in the recent budget, Daviau added.

Thursday’s hearing came after CBC’s The Fifth Estate and Radio-Canada’s Enquete reported earlier this year that shell companies based on the Isle of Man were suspected of being involved in a massive fraud scheme. The scheme cost some investors – like Quebec resident Janet Watson, who told her story to the committee – a large chunk of their savings.

Janet Watson, who lost money in the Mount Real fraud, wants politicians to reopen an investigation into Isle of Man shell companies after a Fifth Estate / Investigation found links to the massive offshore fraud. (Radio Canada)

Some experts believe KPMG may have helped found these companies – something the company repeatedly denied on Thursday.

“Any implication that KPMG has anything to do with the CINAR fraud is false,” Lucia Iacovelli, Canadian partner for tax and legal affairs at KPMG, told the committee. “Any implication that KPMG was involved in any way with the sword companies is also false.”

Iacovelli said business service companies often provide the names of directors and officers of companies they have created for different clients.

Iacovelli has reiterated on several occasions that KPMG has not set up any new offshore structures on the Isle of Man since 2003 and has provided the CRA with information on its offshore structure and the clients for which it was created.

MPs like NDP MP Peter Julian and Bloc Québécois MP Gabriel Ste-Marie have, however, clarified that they have a long list of questions that KPMG will ask to be answered in writing.

Senator Percy Downe, who has doggedly followed the issue of overseas tax evasion and fraud over the years, said other countries were doing a better job than Canada in investigating the evasion tax revealed by leaks like the Panama Papers.

Downe recommended that the Parliamentary Budget Officer be empowered to measure the fiscal gap between what is actually collected and the taxes payable. He said the government should make it a criminal offense not to declare an overseas bank account, implement plans for a public register of beneficial owners behind companies, and increase the salaries of experts in the CRA to reduce the number of recruitments to work for companies contributing to tax avoidance.

Thursday’s hearing was the first step in what Julian said was yet another impetus to examine the impact of offshore tax avoidance on Canada and make recommendations.

The finance committee will now turn its attention over the next few weeks to the omnibus budget bill – but Julian has said he expects the committee to return to the investigation afterwards. tax evasion and fraud.

Julian said he didn’t know how far the committee would go until Parliament rises for the summer the week of June 21.

Elizabeth Thompson can be reached at

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