An in-depth investigation based on 2.5-million documents obtained by the Washington-based International Consortium of Investigative Journalists and shared with 38 news organizations, shows 450 Canadians have money hidden offshore.
Those Canadians are among the 130,000 individuals from more than 170 countries whose offshore investments were uncovered in “corporate files, emails, account ledgers, and other records” representing 260 gigabytes of data obtained by the ICIJ in a project they called “Secrecy for Sale.”
The CBC, through analysis of these documents, alleges Merchant, a former member of Saskatchewan’s legislative assembly, has repeatedly fought Canadian tax authorities in court while sending “large sums of money far away,” to a firm called Portcullis Trustnet based in the Cook Islands in the South Pacific.
The CBC has obtained a tax form that shows in 1999, a year after Merchant set up the trust account, of which he is a beneficiary, he did not disclose if he had foreign assets of more than $100,000, even though “he had put more than 1.7 million dollars into his offshore trust by then,” the network reported.
Putting money in offshore tax havens is not necessarily illegal and the rules governing them can be complex and murky.
But critics say countries lose out if their wealthiest citizens park their riches overseas.
As Liberal Senator Percy Downe told the CBC, if the wealthy hide their money, regular tax-paying citizens essentially “have to pay more.”
“The government has a set amount they have to spend every year. If they don’t get that from all taxpayers, if only a few of us are paying, we have to pay more to make up the shortfall,” he said.
While the federal government has vowed to crack down on tax evaders, Downes criticized the recent federal budget for what he said is a $259-million cut at the Canada Revenue Agency that would “seriously handicap the agency’s ability to tackle the massive problem of overseas tax evasion given the agency’s underwhelming record to date.”
Merchant is a well-known class-action lawsuit litigator. His law firm, Merchant Law Group, has 12 offices across Canada. Merchant was a lead lawyer in the $1.9 billion Indian Residential School settlement.
The CBC said attempts to reach Merchant and his wife were unsuccessful.
An individual at the Regina office of Merchant’s law firm told the Star he was “unavailable.” Messages left at his Regina home and at the senator’s office Wednesday evening were not returned.
The documents revealed by the CBC indicate the trust account, set up in 1998, was called the “Merchant 2000 US Trust.” Senator Pana Merchant and the couple’s three sons were listed beneficiaries.
In order to be tax-exempt in Canada, an offshore trust is not supposed to be controlled by a Canadian taxpayer. However, the CBC said Merchant decided to be the trust’s “protector,” a move the network said allowed him power over it.
The documents, which the Star has not seen, further allege Merchant retained “active involvement” over any investment decisions, the CBC reported.
Merchant also had Trustnet put money into a Bermuda bank account connected to Lines Overseas Management and some of that money was used to buy mutual funds in the small European country of Luxembourg, the CBC said.
Luxembourg is another known tax haven, one that is expected to receive an influx of investors after bank restructuring in Cyprus. The LOM website says it is one of the world’s largest offshore investment firms that “operates solely in tax-favourable jurisdictions.”
It is unclear where the money in Merchant’s trust account comes from or how much is in the account now.
Tax experts agree there is nothing wrong with having an offshore account, but it becomes illegal if you don’t declare earnings.
As a Canadian senator, Pana Merchant must declare her assets and income yearly to the Ethics Commissioner but the public does not have access to the declarations.
The ICIJ, working with news groups such as the Guardian, the Washington Post and the CBC, revealed a long list of international benefactors of offshore tax havens, including the daughter of Ferdinand Marcos, the late dictator of the Philippines, the former wife of an ousted Thai prime minister and members of the family of the president of Azerbaijan.
Original Article
Source: thestar.com
Author: Julian Sher and Tanya Talaga
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