Committee
Consult the user guide
For assistance, please contact us
Consult the user guide
For assistance, please contact us
Add search criteria
Results: 1 - 30 of 226
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Like the minister, I too want to wish you a happy birthday, Mr. Chair.
I am going to start with a statement. Then I will ask my questions.
Hello, Minister. Thank you very much for being here this afternoon.
The committee has already been working on the problems of tax evasion and tax avoidance for some time, in particular on the tax schemes put in place by KPMG, providing a financial vehicle to enable certain of its clients to reduce their tax payable. In light of the internal documents relating to this plan provided to the committee by KPMG on May 17, 2016, this could be a form of tax evasion, so of something illegal.
All these problems are extremely complex, as you acknowledged and pointed out in your speech. Today, for example, we can read in La Presse that data from the Canada Revenue Agency show that its recent efforts to combat tax evasion by the richest Canadians have not led to any charges or convictions. The same kind of article can be read on CTV.
Experts have appeared here to tell us that there is a feeling of impunity toward the government and the CRA, among the users of the tax havens and the tax law experts who create their schemes. We have been told that to put an end to this kind of behaviour, the United States brought out the heavy artillery to deal with KPMG: investigations by the Internal Revenue Service, threats of searches and of charges of obstructing justice, penalties, criminal charges of fraud and conspiracy against the firm and its officers, and threats to charge the firm with being a criminal organization. Here, there has been none of that. Instead, the CRA has proposed voluntary disclosures and still nothing has been resolved with the clients who did not agree.
The experts reminded us that it is not possible to control what we can't see. Unfortunately, as you said in your testimony, the Canada Revenue Agency does not have access to all the information for doing these audits. For example, KPMG keeps going to court so it doesn't have to share its information with the CRA. The experts denounce the appearance of impunity and unfairness for the rich clients and the companies that create these schemes. They conceal their information from the CRA and contest the requests in court. At the committee, it is extremely difficult to get answers to our questions, to shed light on this entire matter. There are even witnesses who refuse to appear, in spite of the summons issued by the committee. These are no jokes!
I repeat: it is important to shed light on this entire matter and get to the bottom of things. We have to be able to put in place laws, regulations, processes and guidelines to prevent any form of tax evasion. That is why I am asking you, as Minister of National Revenue, to initiate a public inquiry into the matter of the schemes created by KPMG that enabled Canadian taxpayers to collect money in the form of gifts or otherwise, money that was not included in the tax returns of the recipients, from companies in the Isle of Man or any other country, as section 231.4 of the Income Tax Act empowers you to do. I believe the committee could also adopt a motion to that effect a little later.
Do you want to initiate a public inquiry, Minister, please?
Thank you.
View Diane Lebouthillier Profile
Lib. (QC)
Thank you, Mr. Chair.
I thank my colleague for all of his preamble and his long question. I have sincere sympathy for the victims of fraud and I understand how much it can affect their lives. However, I can say that under the provisions of the Income Tax Act, I can't comment on any specific case. As my colleague knows very well, I cannot give and I will never give the CRA any instructions concerning criminal investigations.
As is the role of our government, my role is to provide tools and resources so that the CRA, which is autonomous, can do its own work. Out of respect for the obvious principles of judicial independence, politicians must not ever interfere in investigations. That would be really very inappropriate.
View Gabriel Ste-Marie Profile
BQ (QC)
If I may, that is not at all what I asked. The committee's limitations are clear, and the only solution, the only tool, for shedding light on the entirety of KPMG's offshore activities is the public inquiry.
We are not talking about an investigation before the courts. You, as the Minister of National Revenue, are the only one who has this power under the Income Tax Act; you can ask for a public inquiry to be held to get to the bottom of things and shed light on the situation. In my opinion, that is what should be done.
I will ask you again. Please, can you ask for a public inquiry to be held into this entire matter so we can get to the bottom of things?
Thank you.
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Chair, as you all know, committees are independent. You manage your own business.
What I am seeing at present is that my colleague wants to play police officer. I invite him to give up his seat as a member and apply for a position as an investigator with the RCMP, where there are vacant positions. He would probably be happier there than in his present position.
View Gabriel Ste-Marie Profile
BQ (QC)
I am extremely disappointed to hear such nonsense being given as an answer.
In the United States, a senate committee held an inquiry that has changed things. It is our role to do that here. My role as an elected representative, and our role as a committee, is to ask the minister to initiate a public inquiry to get to the bottom of things. There are enough points to be raised to ask for that.
We are not getting any answers, other than being told to change jobs. What a load of nonsense. She is the one who has the power.
Is she going to do it, yes or no?
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Chair, I am going to ask my colleague to vote on budget 2021, which sets out proposals that really are even more useful for eliminating the loopholes used to avoid paying taxes in Canada, and that allocate additional money to the CRA so that it can modernize and improve its capacities.
In addition to all the work done and the agreements signed by the countries, I am also very happy to see that the United States has embarked on the same path. We are therefore going to work in collaboration with our partners. As I said at the outset, this is a long and complex issue, and I understand very well that the public are offended. We are continuing our work and we truly want to combat tax evasion. This is a priority for our government.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
I also want to wish you a happy birthday. Someday we will celebrate together, I'm sure.
I would like to welcome the minister and Mr. Gallivan.
I'm going to continue in the same vein as Mr. Ste‑Marie.
We are talking about thousands of Canadians, victims who have lost all their life savings. We know very well that in the frauds committed by Norshield and Mount Real, there are thousands of Canadians who lost everything. The system has never got justice for them.
Minister, you have been the minister for six years. What do you say to the victims, like Janet Watson who appeared before the committee, who say that the government has done absolutely nothing to protect them or to bring the guilty parties to justice?
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Chair, I thank my colleague for his question. We know that I have very sincere sympathy for the people who have been victims of fraud, just as he does. I truly understand how much this can affect their lives.
However, as I said, and it doesn't bother me to repeat it, our government respects the CRA's status. I can't instruct the CRA to initiate audits and I do not intervene in audits. This is what protects the integrity of the tax system. We are going to continue doing the work we do, and because we want to keep moving forward, I invite my colleague to vote for the budget that has been introduced. It contains even greater resources to tighten the net and make sure that people pay their fair share.
If my colleague wishes to get any more technical and administrative information, Mr. Gallivan can answer him.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
If we want to get to the bottom of the tale of the shell companies set up by KPMG, if we want to get to the bottom of the tale of the thousands of small investors like Ms. Watson who were swindled, the only solution, according to the experts, is a public inquiry. Tax law expert André Lareau is one of the people saying that.
The role of requesting an inquiry has been assigned to you, Minister, and no one else. I also want to remind you that it was thanks to a whistle-blower inside the CRA that we got wind of the deals that were offered to the Isle of Man fraudsters. The reason the CRA's investigators are unhappy is that the order came from higher up. It takes a public inquiry.
Are you going to call a public inquiry, as you are given the authority to do by section 231.4 of the Income Tax Act, yes or no?
View Diane Lebouthillier Profile
Lib. (QC)
I thank my colleague for his question.
As I said, I can understand very well. I have enormous sympathy for the people who have been victims of fraud. I know how much this must affect them.
Out of respect for the obvious principles of judicial independence, I believe that politicians should never interfere in investigations.
View Gabriel Ste-Marie Profile
BQ (QC)
It isn't interference.
Minister, you are the only person in Canada with the power to shed light on it and get to the bottom of things. That is the power you have. You are the minister. Sympathy is not enough.
Are you going to initiate a public inquiry?
I understand it's a no. The message you are sending to everyone who has been swindled is that you are sympathetic, but you aren't going to do anything. That is unacceptable. That choice is the choice to do nothing to get it moving, to do nothing to get to the bottom of things. That is a definite sign of incompetence.
View Diane Lebouthillier Profile
Lib. (QC)
I can understand my colleague's frustrations. For our part, we govern. We establish priorities.
View Diane Lebouthillier Profile
Lib. (QC)
That is what my colleague will never be able to do. I have told him repeatedly that the Canada Revenue Agency is independent. I cannot initiate an investigation—
View Gabriel Ste-Marie Profile
BQ (QC)
You are the only person who can request a public inquiry. It would seem that you do not even know this. That is unacceptable.
View Wayne Easter Profile
Lib. (PE)
Mr. Ste-Marie, the minister has the floor. I don't want to intervene here, but I would suggest that members go back and look at Mr. Gallivan's answer on section 231.4, in which he talked about what kind of inquiry that is under the act. I'd suggest members look at that comment. Look at section 231.4 in relation to the words Mr. Gallivan said earlier.
Mr. Julian.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
I think we probably have about 45 minutes. I believe that Mr. Ste-Marie wants to come back to an issue as well.
I've already circulated the motion and I'll read it for the record and then add an amendment just to facilitate things. This is following discussions with Mr. Sorbara. I move:
That the Committee request that the government initiate a public inquiry under the Income Tax Act—
I would add “or the Inquiries Act”.
—to investigate tax planning by KPMG, or any of its subsidiaries, in the Isle of Man, the possible involvement of the sword companies Shashqua, Katar, Sceax, Spatha and Parrhesia corporations, and to investigate tax fraud in the Cinar, Norshield and Mount Real cases and any possible links with the KPMG Isle of Man tax planning and/or Isle of Man's sword companies, and that this be reported to the House.
I'm adding “or the Inquiries Act” because that gives the government the scope to use either tool, and since there is some dispute around the use of the Income Tax Act, my interpretation—and I would certainly agree with Mr. Ste-Marie and Mr. Lareau on that—is that it gives the government a broader scope to use the tool that is most appropriate.
The most important thing here is that we know from the testimony we had from Janet Watson, from the really important journalism we've seen both with Enquête on Radio-Canada and also from The Fifth Estate on CBC that thousands of Canadians were defrauded. That money was taken overseas. We have a responsibility and we've undertaken to get to the bottom of it as much as we can, but to date, we have asked KPMG many questions and have received often evasive or incorrect responses or no responses at all.
Therefore, I believe that given what we know and that we all share an interest in getting to the bottom of this and we all share an interest in seeking justice for the victims of these colossal frauds—half a billion dollars, and people losing their life's savings. You can only imagine somebody who saved up, like Janet Watson did, $68,000 of her life savings and lost it all due to this fraud.
I believe we have a responsibility to pass this motion. Ultimately, it is a request, but it does seek justice for the victims, and I believe that's what every member of this committee wants to see as well.
View Gabriel Ste-Marie Profile
BQ (QC)
Before I make that statement, if I may, Mr. Chair, I would be prepared to move the motion to which Mr. Julian was referring, if the clerk can confirm that he has received the motion by email, which he can distribute to colleagues.
So you should have the version in both languages shortly. In the meantime, I will read the motion and move it to see if you agree.
As my colleague Mr. Peter Julian said, when the representative from KPMG Canada appeared, I asked some questions. Afterwards, the clerk sent them in writing, and then we received two letters from the lawyer representing KPMG that raised some points, but didn't answer most of the questions.
Therefore, I would move that the committee adopt the following motion and, if appropriate, that these matters be referred to KPMG, along with the letter provided to us by the law clerk and parliamentary counsel of the House regarding committee rights and privileges.
Here is the motion:
That the Finance Committee ask KPMG Canada the following questions, and expects a response by August 1, 2021.KPMG Canada may submit its responses with confidential client information redacted, making sure to submit a non-redacted version to the Law Clerk for verification.1. KPMG has set up tax strategies that provide a financial vehicle enabling some of its clients to reduce their tax payable. For each case in which KPMG Canada created or helped create, directly or indirectly, one or more corporations in the Isle of Man, thereby enabling one or more Canadian taxpayers to conceal money or to reduce their tax payable, please provide the committee with the following:a) All documents used in these strategies;b) A list of the corporations that were created through these strategies; c) A list of the officers and directors involved in these strategies;d) The number of strategies and the number of individuals who benefited from them, directly or indirectly; ande) The fees that KPMG received for each strategy.2. In addition, please provide all of the above information for each similar strategy using jurisdictions other than the Isle of Man, making sure to indicate the jurisdiction for each case. 3. Please provide for each KPMG Canada client the conclusions of each file with CRA, including taxes reimbursed, incurred interest, and penalties for each taxpayer4. Did KPMG Canada ask another corporation, KPMG Isle of Man, or any other corporation to create, directly or indirectly, one or more of the four corporations registered in the Isle of Man under the names Shashqua, Sceax, Katar, and Spatha? If so, which ones, and how? For that purpose, we ask that KPMG Canada interview staff members who may have information on this subject, and to not limit its research to the last ten years.5. Did KPMG Canada directly or indirectly contribute to, or participate in, the creation or use of one or more of these four corporations? If so, which ones, and how? For that purpose, we ask that KPMG Canada interview staff members who may have information on this subject, and to not limit its research to the last ten years.
That is the motion. As I say, if the committee adopts it, I propose that these questions be sent to KPMG, along with the letter that the Office of the Law Clerk and Parliamentary Counsel of the House has provided us.
Thank you.
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:27
Yes, I'm here. I don't know for how long, because the IT guys have been trying to fix the problem for one hour and a half.
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:29
My remarks have already been sent to Mr. Roger. I will now make my opening statement.
Thank you for your invitation to participate in the work of your committee. I'm a retired KPMG employee and I was...
Can you hear me?
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:29
I'm sorry, but I was told that you couldn't hear me. So I will continue.
Thank you for the invitation.
I am retired from KPMG. I was an associate in the Montreal office for 25 years, from 1987 to 2014. I was never in charge of the tax department or any other department at KPMG, either locally, provincially or nationally. I was a client service associate, not a manager.
In summary, I advised clients on Canadian and international tax matters. I was involved in developing and implementing foreign transactions, such as financial structures, like the so‑called double dipping, the repatriation of foreign profits, and foreign currency management.
I have also acted as an advisor in several mergers, acquisitions and corporate restructuring for both public and private companies.
In the course of my career, I have had numerous discussions with tax authorities to obtain advance rulings or during tax audits. The discussions sometimes concerned foreign operations. My role was to meet the needs of clients by applying tax laws with the highest standards of integrity, compliance and professionalism.
Like most professionals in Quebec, as a CPA, I am bound by professional secrecy regarding our clients and former clients. I will do my best to answer your questions in light of this confidentiality requirement.
However, I can confirm beyond any doubt that I was never involved, as an associate or otherwise in what has been called the Cinar affair. The first time I heard about this case was in the media. Unfortunately, fraud appears to have been involved. As a Canadian taxpayer and a tax professional, I strongly encourage this committee to shed light on the matter.
Today, I am an occasional consultant for KPMG and sit on a few boards of directors.
KPMG is a firm that, in my experience, always acts with integrity and in the best interests of Canadians.
I would like to clarify a few points in that sense.
With respect to the Isle of Man's foreign company structure—the so‑called OCS—I was not involved in its development. I became aware of the structure in the early 2000s, as did several other tax associates in the firm. I reviewed the analysis prepared by the firm's senior tax experts, as well as the two independent legal opinions. At the time, I felt that the structure was valid from a tax and legal perspective, as long as clients followed the advice provided. I personally participated in creating two of those structures. In one case, a third party company was responsible for implementing the structure, so my role was limited.
I also want to make it clear that I was not involved, as an associate or otherwise, in the shell companies named after swords or in Parrhesia. I understand that this may be of interest to you, because those companies were registered in the Isle of Man, but neither of them were associated with the two cases I worked on.
I would not be able to give you any information on that. [Technical difficulty] Ms. Iacovelli, who answered your questions on this subject when she appeared before the committee.
I will do my best to contribute to the discussion today.
View Pat Kelly Profile
CPC (AB)
Thank you.
Would you support the testimony we already heard? You say that KPMG had no involvement in the sword companies or the Cinar affairs. That's your testimony.
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:34
I said that I was not personally involved and I directed you to the testimony of my former colleague who appeared before your committee.
View Pat Kelly Profile
CPC (AB)
When you were an employee at the Montreal office, your office did offer offshore products to your clients. That was something you did in the course of your work at KPMG in Montreal. You said you had two clients, or you were at least involved in offering offshore products on two occasions.
View Pat Kelly Profile
CPC (AB)
Okay.
I really want to know about the scope. I'll go a little further with the question just to ask about the scope of overseas products offered in the Montreal office when the witness was there. I think he said in his opening statement that on a couple of occasions, he'd been involved in that.
Can he comment? Was tax planning involving overseas products a common or widely used strategy in the Montreal office when he worked there?
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:43
Actually, the product, what we call OCS planning, that is to say the foreign company structure, was offered on a national basis, not only in Montreal.
However, in terms of my responsibility to the clients, my involvement in both situations was from Montreal.
View Pat Kelly Profile
CPC (AB)
Okay, so what changed? When did your business stop offering overseas products and why?
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:44
The planning was developed by a group of senior tax experts, led by a man named Barrie Philp, and it was developed on a national level. The analysis was done on a national level. Then it was explained locally, in each of the provinces. When the situation was appropriate, it was discussed with the client and, if they agreed, it was implemented.
View Pat Kelly Profile
CPC (AB)
I'm not sure that was an answer to my question. I wanted to know when.
Was there a date or a time period at which KPMG stopped offering overseas products? I think the earlier testimony suggested that there was a time at which KPMG ceased offering this kind of tax plan.
Serge Bilodeau
View Serge Bilodeau Profile
Serge Bilodeau
2021-06-17 16:45
KPMG did an overall assessment and stopped offering those products in 2002, 2003 or 2004. In fact, the decision was the firm's, not the local office in Montreal. That's why I hesitated. That decision was made by the firm on a national basis.
Results: 1 - 30 of 226 | Page: 1 of 8

1
2
3
4
5
6
7
8
>
>|
Export As: XML CSV RSS

For more data options, please see Open Data