This is good in a twisted way. Canadian politicians don’t go after their “own.” Real embarrassing for Liberal Senator Percy Downe of PEI to have a fellow party member in this situation.
A prominent Canadian lawyer, husband to a Liberal senator, moved nearly $2 million to secretive financial havens while he was locked in battle with the Canada Revenue Agency over his taxes, according to documents in a massive leak of offshore financial data that were shared exclusively in Canada with CBC News.
Senator Pana Merchant, left, was named as a beneficiary of a trust set up by her husband, lawyer Tony Merchant.
Tony Merchant of Regina, dubbed Canada’s class-action king because of the large settlements he has won for his clients, transferred money to a tax haven in the South Pacific and then onward to an account in the Caribbean, according to the files. His wife, Senator Pana Merchant, as well as their three sons are named in the documents as beneficiaries of the funds.
The transactions are detailed in a huge leak of offshore financial information received by the Washington, D.C.-based International Consortium of Investigative Journalists, a non-profit group that has shared the records with CBC News and media outlets in 35 other countries. It is thought to be one of the biggest ever leaks of financial data.
Not sure it’s a good thing. Might make the Canadian government more amenible to coming to an IGA settlement with the US.
She better vote against it.
In the same lines, France is being shaken by a similar scandal:
Former budget minister Jérôme Cahuzac made a fortune as a cosmetic surgeon, opened a secret bank account at UBS that was brought up to light lately.
He lied repeatedly to the parliament claiming he never had foreign accounts.
When things got to hot, he transfered the money to Singapore.
He finally came “clean” when he realized everything was going to be discovered.
FYI, he was advocating not too long ago for stronger methods of catching tax evaders, and is the one who was advocating for taxing French people based on citizenship. How ironic…
The next big story by CBC will be that the Canadian government has signed an IGA with the US. This story of some likely real ‘tax evasion’ and the response of the general public has now set their minds up to accept that it’s OK for Canada to sign away the Charter’s privacy rights.
What Canadian (and other country) privacy rights were breached to get this information? Shows to our societies those privacy rights are not a good thing, right?
The politician doth protest too much, methinks.
Except that we are not sending our money off-shore. it is where we are.
Thanks for posting this. The most significant part of the article is the way that it ends – Calling all Whistle Blowers! I have never seen the CBC asking the general public to “turn people in”!
“More and more upper-income Canadians are hiding their money overseas, not contributing to the Canadian economy and not paying their fair share, and that simply means the rest of us have to pay more,” he said in an interview. “It’s grossly unfair.”
If you have more information on this story, or other investigative tips to pass on, please email email@example.com. You can also send mail to: CBC Investigations Unit, 205 Wellington St. W., Toronto, Ontario, M5V 3G7
and here’s Em’s relevant comment to a different post: http://isaacbrocksociety.ca/2013/04/03/unbelievable-hypocrisy-cra-says-cant-recover-tax-penalties-in-lichtenstein-due-to-our-privacy-laws/comment-page-1/#comment-258075
That doesn’t help expats’ and immigrant’s cause:
Offshore tax shelters disclosed in leaked documents:
“We expected to find only the mega rich using [offshore accounts],” said Gerard Ryle, director of the consortium. “But in fact we found it was being used by a much broader section of society.”
Wonder what the ICIJ word is on collateral damage?
http://www.icij.org/ The International Consortium of Investigative Journalists
The anticipation of which CHOICE the Canadian government will make in how it portrays Canadian citizens and residents with US personhood is killing me. They will either find some way to defend the US’s right to tax its own citizens extraterritorially (while Canada itself does not) or they will do something brilliantly heroic and save us from the jaws of death. Or, maybe they’ll let the IGA chips fall where they may and stick with the status quo and not comment at all. They’ll quickly learn though, that 1M Canadians and their families make a hell of a speed bump when they’re thrown under a bus!
I still can’t imagine though, how on one hand the Canadian government can defend the US, and on the other continue to not collect taxes for them. Doesn’t make sense, unless they are willing to do the biggest flip-flop in Canadian history that I’m aware of-and as a result become the IRS’s largest foreign collection arm! When I met with John Weston he was appalled that the IRS had a claim on the proceeds of the sale of our home in Canada, yet it’s only because of our politicians poor maintenance of the tax treaty that I owed anything at all. Not a lot of trust here.
This mother-lode of offshore account data may just be our salvation! Perhaps the IRS will be so inundated with bona-fide tax evaders that they won’t have the resources to pursue USP’s who actually reside abroad and owe nothing! I must be dreaming…this will more likely result in an IRS hiring spree.
It would be useful for all of us to be able and ready to clearly identify the significant differences between this scenario above, and how our local legal Canadian accounts are going to be treated under FATCA for the purposes of speaking with our MPs.
It is clear to me that there will be considerable misperception and mischaracterization (which the US will take full advantage of) over why a FATCA IGA does nothing to assist the CRA and Canada to catch Canadian tax evaders with ‘offshore’ assets, and should not be signed. FATCA purports to be about US tax evasion (and money laundering, etc.), but most casual observers will not know/understand the significant issues, conflicts and burdens imposed by the unique US extraterritorial citizenship-based tax system (vs. that based solely on residence – as in the rest of the planet other than Eritrea). Most MPs will also not know that the existing reciprocal Canada-US tax treaty already includes the automatic reporting of US residents who have accounts in Canada, and Canadian residents with US accounts.
Important points to make in any discussion of FATCA:
– our accounts and assets are held in Canada, LOCAL to where we live, work, and already pay taxes in full, thus are NOT hidden, ‘offshore’ or untaxed.
– Canada is NOT a tax haven. See one definition as cited here; http://www.cbc.ca/news/world/story/2013/04/03/offshore-data-leak.html “…….the International Monetary Fund says most of what it officially calls “offshore financial centres” are distinguished by:
A banking sector that primarily serves non-residents.
Low to no taxation on foreign firms and people.
Tight financial secrecy;
– our accounts are registered with our SIN#s, transparent to the CRA, with any interest and other investment income that may have been received, automatically reported by the bank, generating a T5, T3, or T5013 slip – which is then reported on our Canadian tax returns.
– FATCA covers assets that go far beyond what is actually current and taxable income, including future interests in insurance, pension plans, and other assets which have not actually been received, and are contingent on events such as; becoming ‘vested’, retiring from a workplace, reaching a certain age, death, etc.
– Canada defines taxpayers based on residency, vs. US on residency and citizenship. Thus the US is demanding the banking information of Canadian permanent residents and Canadian citizen-duals with NO US relationship, residence, economic ties or activity.
– FATCA discriminates against individuals on the basis of national origin, contrary to the Charter and Canadian Constitution.
– Coupled with FATCA is the US financial reporting requirements via FBARs; which includes NON-personal accounts, and accounts with NO present or potential financial interest, such as the accounts of Canadian employers and voluntary organizations if we have a co-signatory capability. FBAR also includes reporting on accounts and assets where access does not currently exist, and is entirely contingent on some future potential event such as incapacity of the true owner – as in advance planning. The FBAR is NOT a report of interest earned, and the ‘highest balance’ to be reported is NOT a reflection of taxable income or earnings (ex. may be actually a debt – ex. a mortgage sum transferred from the bank to the account on the day of house purchase), and the balances are often post-tax wages. It also often includes the assets of non-US joint account holders who have no US tax or reporting obligation.
@calgary, re “The next big story by CBC will be that the Canadian government has signed an IGA with the US..”. That is what I am afraid will happen – and this story will grease the wheels of the bus as we’re run over.
@bubblebustin; re “…which CHOICE the Canadian government will make in how it portrays Canadian citizens and residents with US personhood is killing me…”
It occurs to me that we must repeat ad infinitum that we have already paid all taxes in full to one country – CANADA, and that the US claims the right to tax our Canadian home-principal residence and our legal registered Canadian savings as in TFSAs and RESPs (and RRSPs without the 8891 treaty election). No one would believe that those are the products of tax evasion, or that they should be claimed by the US. No-one would believe that holding a Canadian bank account in the town where they live is a ‘hidden’ ‘offshore’ account. We must repeat what Minister Flaherty said in his letters and public statements – and quote him verbatim.
Agree with the substance of what you are saying. But, this must be redefined in small clips.
For example: the term “citizenship-based taxation” makes it all seem more reasonable/plausible.
Instead of calling it “citizenship-based taxation” it should be characterized as:
“The US practice of imposing income taxes on residents of other countries, on income earned in those countries – making it an “extraterritorial tax”. Somebody would then ask: “You must be kidding. How can that be?” The answer is: the U.S. is one of two countries in the world that believes that it owns anybody – regardless of where they live – who happened to be born in the US or anybody who was ever given permission to live there.”
This is what the problem really is.
You just have to read the comments on the CBC story to see how effective this type of propaganda piece is. People are virtually slinging a hangman’s noose over a lynching tree over this. I wonder how much money Canada shelters for foreigners and if all the worldwide criss-crossed sheltering becomes pretty much a wash for all countries when the accounts are tallied? I am very suspicious about the timing now that the FATCA express is getting up steam. I rather doubt that the big-time cheats who have political connections will ever pay the CRA piper. (Certainly the Bronfman family never did.)
It might be a good idea to create what I would call the Isaac Brock Dictionary. The purpose would be to take all these stupid words and redefine in them simple language that explains what they really mean.
“offshore” – where a Vermont resident goes when he drives into Quebec
“foreign bank account” – the UK bank where an “au pair” girl banks while she lives in the UK
“PFIC” – a Canadian mutual fund and a sacred instrument of tax evasion
“Canadian tax deferred retirement plans” – the best place to hide a PFIC
“US person” – a person who lives outside the US, that the US decides it wants to levy taxes on
“FATCA” – a legislative scheme to force non-US residents to pay the bills of homelanders
“US lawyer/accountant” – a business associate of the IRS
“owner of a Canadian Controlled Private Corporation” – owner of an “entity” presumed to be created for tax evasion
“RESP” – a “sacred instrument of tax evasion”
“RRSP” – proof that US citizens abroad should not be eligible for US social security payments
“Principal Residence” – a “sacred instrument” of tax deferral
“fluctuating exchange rates” – a way to levy taxes on US persons abroad when they have done nothing at all
“children” – potential US person and future tax chattel
“TFSA” – a plan generating income that belongs to the US treasury
“Administrator of TFSA” – a co-conspirator in an agreement to evade US tax
“Canadian banks” – deputy IRS agents
“After tax income in Canada” – what’s left for the IRS to go after
“Foreign Trust” – An sacred trust that loses its trustworthiness because it’s “offshore”
“US persons in Canada” – a growing body of people, watch the definitions!
“Your non-US person spouse”- somebody who might abscond with assets that belong to the US Treasury
“whole life insurance policy” – another sacred instrument of tax evasion
“retirement planning” – something US persons are not allowed to do
I have to stop because I am getting angrier and angrier. Feel free to modify and and.
“The anticipation of which CHOICE the Canadian government will make in how it portrays Canadian citizens and residents with US personhood is killing me.”
The whole point is that is NOT making a choice. It is following orders from the US and Canadian banks. Nobody would CHOOSE to comply with FATCA.
The lawyer in this article is a very well known “class action” lawyer. Maybe he should be retained by those opposed to FATCA.
Thank you, USCitizenAbroad, I assume you will only have an online version of your dictionary, as anything so dripping in sarcasm would be impossible to keep a grasp on 🙂
The choice I’m referring to would be in how the Canadian government portrays USP’s in Canada.
We had a glossary started back in June 2012. Maybe it’s time to get all these terms together and place them in the resources section.
@Chris, here’s another one to go with yours:
Amazingly I have never seen that – yes they need to be brought together.
I agree re your phrase; ““The US practice of imposing income taxes on residents of other countries, on income earned in those countries – making it an “extraterritorial tax””
vs. the phrase ‘US extra-territorial citizenship-based taxation”….
If only there was a really succinct way of explaining the problem consistently – which I’ve continually struggled with. Every time I hear someone in the media use the terms ‘US Citzens’ or ‘US persons in Canada’, I cringe, because that emphasizes the US claims on us via our inherited (via parentage), or ‘accidental’ birthplace or naturalized US status, yet leaves out the ex and current greencard holders, and some of the snowbirds who stayed too long in the US – but are actually first and foremost Canadian citizens and residents.
And of course we’re not only opposing ‘US tax’ per se, but FBAR and FATCA go far beyond people’s common conception and experiences of reporting to only their sole country of residence via a ‘simple’ ‘income’ tax and can only visualize their own scenario. And then there are the effects on non-US joint account holders (business partners, employers, voluntary organizations, non-US family members) – who have no US connection at all – except their relationship with us.
I have been trying different versions in my e-mails, phone conversations and visits to MPs. The complexity and truth of it is certainly a huge barrier to being able to convey it with clarity and maximum impact – in a way that anyone can comprehend.