# CRA vs. KPMG



## gardner (Feb 13, 2014)

The CRA is going after KPMG and a bunch of their customers.

http://www.cbc.ca/news/business/kpmg-offshore-sham-deceived-tax-authorities-cra-alleges-1.3209838

The article is basically detail-free. Anyone know what KPMG's theory is that the CRA is taking exception to?


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## Davis (Nov 11, 2014)

Family "gives" a bunch of money to an Isle of Man company, which presumably invests the money, and later "gives" money back to the family. There is no tax on gifts, but only an idiot would believe that the family has given money to a company in another country without any expectation of anything in return. It is also beyond belief that a company exists to give money away to wealthy families. I'm not wealthy, but maybe I should write to the company to ask them to give me money. I wonder what sort of answer I'll get. And further, the parties have paid KPMG 15% to arrange these gifts. Because apparently you need an intermediary to give money away. I'd love to see KPMG's rationale. I worked for one of the other of the big 4. The aim of these products is not to find something that makes sense, but to find a loophole in the wording of the law, however nonsensical, and hope that CRA doesn't resort to the general anti-avoidance rule. CRA doesn't like to use GAAR, which I think is why they are characterizing this as a sham transaction.


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## sags (May 15, 2010)

Welcome to the CRA house of pain...........


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## AltaRed (Jun 8, 2009)

Thank goodness for CRA standing up to sham tax evasion. That sort of thing hurts the rest of the tax paying public.


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## CPA Candidate (Dec 15, 2013)

I sincerely hope KPMG gets destroyed.


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## gardner (Feb 13, 2014)

Davis said:


> It is also beyond belief that a company exists to give money away to wealthy families.


If it were a rich uncle in the old country giving gifts, this would be believable -- probably acceptable. Who's to say that the corporate structure is not just a convenience for rich uncle moneybags?


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## cashinstinct (Apr 4, 2009)

CPA Candidate said:


> I sincerely hope KPMG gets destroyed.


You better stay anonymous  . Be cautious of what you say about other members of your CPA profession.


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## AltaRed (Jun 8, 2009)

Seems KPMG has been in negotiations with Dept of Justice for an out-of-court settlement. I wouldn't budge if I was Ottawa. Offshore tax schemes must be RPG'd in a highly punishing and public way. Maybe PM Mulcair will take care of that along with the closure of "rich executive stock option loopholes" as Mulcair calls them.


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## kcowan (Jul 1, 2010)

Interesting the KPMG is starting to act like Goldman-Sachs. If it a bonafide loophole, CRA will need to negotiate a cease-and-desist order.


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## wendi1 (Oct 2, 2013)

KPMG needs its little piggy pinkies slapped. Hard.


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## Robillard (Apr 11, 2009)

I don't know the details of what the CRA objects to in this case, but if this has already gone to tax court, then the filings might be publicly available on the TCC's website. Also, I think the pleadings are linked in the article. I suspect that it has something to do with Isle of Man trusts. The "gift" terminology is a bit peculiar. Canada does not have a gift tax. I think the CRA doesn't think that the gift characterisation is correct, and is reclassifying those amounts as regular income. 

The CBC article is typical in its ignorance of Canadian personal tax, and of tax consulting as a business. They make it sound so nefarious that a business that provides tax advice would try to "target" clients, as if this isn't something that salespeople do in any business. And the article implies that somehow high net worth individuals are somehow not entitled to personal tax credits that all Canadian taxpayers are entitled to... as if the apparent tax shelter and the tax credits were connected, which I would not expect them to be.

Disclosure: I worked for KPMG during some of the covered years, though I did not work on the personal taxes of high net worth individuals.


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## RCB (Jan 11, 2014)

http://federaltaxcrimes.blogspot.ca/2015/09/kpmg-under-scrutiny-in-canada-over-sham.html


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