Taxman issues Vancouver warrants in Panama Papers probe

CRA says offshore accounts allegedly used to evade ‘significant’ amount of taxes on money earned in Canada

The Canada Revenue Agency announced Thursday that two search warrants were executed in Vancouver to find further evidence into a $77 million offshore tax evasion case related to the “Panama Papers.” Photo Mike Howell

Canada’s taxman came knocking on two Vancouver doors Thursday with search warrants in connection to a $77 million non-resident tax evasion investigation stemming from the Panama Papers.

The Canada Revenue Agency (CRA) announced the warrants via an online statement Thursday but did not indicate the exact location of the warrant or who or what the suspects are.

A CRA investigation involving 40 investigators “uncovered a series of transactions involving offshore tax havens in an alleged attempt to evade payment of $77 million in non-resident withholding tax,” the CRA stated.

“The relationships between the domestic and offshore entities involved were confirmed through various information sources, including records obtained through the ‘Panama Papers’ leak.”

It’s unclear what sort of income was allegedly being evaded.

Non-residents of Canada for tax purposes are those who normally live in another country and do not have “significant ties” to the country. They must, however, pay taxes on income earned in Canada.

Canadian employers are obligated to deduct taxes from non-residents. As well, when a non-resident sells a property, taxes must be paid on any capital gains. It is the responsibility of buyers to generally withhold 25% of payment, otherwise they will be liable for the taxes of the non-resident seller.

The CRA statement also doesn’t indicate what party or parties are alleged to be evading taxes.

Glacier Media posed a number of questions to the CRA to ascertain more details.

But “beyond confirming that a search is taking place, the CRA does not comment or provide details on ongoing investigations or taxpayer specific information,” the agency replied.

It confirmed no charges had been laid.

The CRA went on to say that the warrants stem from one of 52 international and offshore tax evasion cases under investigation.

“The CRA is currently investigating cases representing over $400 million in potential federal taxes evaded,” the agency said.

The 2019 federal budget has noted how tax evasion and money laundering in B.C. are intertwined.

The B.C. government is expected to release to the public a special report on money laundering in B.C. real estate, horse racing and luxury car purchases next month.

The CRA recently released data on its augmented program to catch tax evasion in the B.C. real estate sector.

In 2015 the CRA augmented its compliance program for B.C. and Ontario real estate audits. Last month the agency issued a report claiming it had collected $140.7 million from 1,417 real estate audits in B.C. alone, from April 2018, to December 2018. Those totals, representing $99,294 per audit, are well above the three-year average of $45,182 per B.C. audit, and Ontario’s average of $17,241 per audit.

The federal budget is diverting more money to tax audits and improving the monitoring system. It notes B.C.’s new speculation and vacancy tax enhances the CRA’s monitoring capabilities for real estate by linking home ownership to income tax returns.