The Canada Revenue Agency (“CRA”) is investigating KPMG for a tax avoidance scheme

In 2000, a wealthy B.C. family invested approximately $26 million in a KPMG tax product in the Isle of Man, a self-governing territory. This tax product was targeted for high net worth Canadian residents, resulting in the family paying close to no tax over several years.

As a result of this investment, the B.C. family received approximately $6 million between the 2002 and 2010 taxation years. KPMG is claiming that the distributed funds were gifts and therefore non-taxable. The CRA asserts that both the B.C. family and KPMG knew that the funds were being hidden in an offshore account that was actually owned by the family. 

The CRA has levied gross negligent penalties against the B.C. family and has sent a demand order to pay millions in tax arrears.

In 2013, the court issued an order permitting the CRA to obtain KMPG’s list of clients who had also invested in the Isle of Man plan. It is likely that once that once the CRA obtains this information, they will be charging other taxpayers with gross negligent penalties.  

KPMG has filed a court motion to squash the aforementioned order, stating that this court order violates their client’s rights. Currently no further measures have been taken.

If you or someone you know has taken part in KPMG’s offshore tax avoidance, call Barrett Tax Law today and speak with an expert tax lawyer.