CRA Continuing Investigations into Canadians Linked to Panama Papers and Paradise Papers

January 30, 2019
Close up of palm fronds

written on behalf of Feigenbaum Law

We have previously blogged about the Canada Revenue Agency’s (CRA’s) increased crackdowns on the use of offshore tax shelters. Previously, the CRA was focused primarily on Canadian taxpayers who had been implicated in the Panama Papers leak, including search warrants executed as a result of the leak as well as the first Canadian investigated as a result of the now infamous leak of financial information.

Now, Canadian news sources are reporting that the CRA has also begun to focus on taxpayers implicated in a separate data breach- the Paradise Papers.

Panama Papers versus Paradise Papers

While similar sounding, the Panama Papers leak and the Paradise Papers leak were actually two separate data leaks.

Panama Papers

In 2015, German newspaper Süddeutsche Zeitung presented the International Consortium of Investigative Journalists with more than 1 million documents leaked from Mossack Fonseca, a Panamanian based law firm with offices worldwide. The leak included more than 40 years of data from the firm, including information on more than 214,000 offshore companies connected to individuals in more than 200 jurisdictions.

A CRA review of the Panama Papers identified 3,330 offshore entities and 2,670 “possible beneficial owners” that “have some link to Canada”.

Paradise Papers

In 2017, Süddeutsche Zeitung again obtained leaked documents, this time from global law firm Appleby as well as the corporate registries of 19 tax havens which revealed billions of dollars being sheltered offshore. The leak exposed well-known multinational corporations, politicians, celebrities, athletes, and high-net worth individuals.

More than 3000 Canadians and Canadian corporations (including the Montreal Canadiens and Loblaw) have been named in the Paradise Papers.

Ongoing CRA Investigations

As of late 2018, the CRA had 50 “mature” investigations into tax evasion generally. However, “few” of them are related to the Panama or Paradise Papers.

Dan Morin, CRA spokesman, told CBC News that:

To date, no Canadian taxpayer or company has been charged with an offence as a result of information received from the Panama or Paradise Paper affairs…[i]n relation to the Panama and Paradise Papers specifically, several criminal investigations are ongoing. As with any criminal investigation undertaken by law enforcement bodies, including the CRA, these can be complex and require months of years to complete.

More recently approximately 100 Canadian taxpayers named in the Paradise Papers database have been identified for audit. More than 1,300 auditors were hired as the CRA attempts to crack down on offshore tax schemes. 25 employees have been assigned to work specifically on Paradise Papers issues.

Potential Implications

According to the CRA, consequences for “wilfully failing to follow tax rules” include:

  • Reassessments;
  • The imposition of civil penalties;
  • Criminal tax investigations;
  • Court fines;
  • Jail time;
  • Criminal record.

Individuals convicted of tax evasion face fines between 50% to 200% of the evaded taxes and up to five years in prison. Individuals convicted of fraud can face up to 14 years in jail.

It is important to obtain professional advice and careful guidance when it comes to tax planning in order to remain on the right side of the law. If you have questions about personal tax planning or corporate tax planning contact Mark Feigenbaum at Feigenbaum Law. Our team provides custom solutions to your personal or corporate tax needs. Our goal is to create the best tax strategy possible for our clients. We work with you to streamline your compliance requirements and set you up to take advantage of all possible current and future opportunities. Our focus is complex matters related to tax planning for individuals with high net-worth. Contact us to learn more about how we can help or call us at (905) 695-1269 or toll free at (877) 275-4792.


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