CRA investigating 85 Canadians for tax evasion tied to Panama Papers

Eighty-five Canadians identified in the Panama Papers leak are now being investigated for tax evasion, the Canada Revenue Agency has revealed.

Details of Canada’s enforcement effort were provided to the Star the same week the U.K., which is a major hub of the offshore finance world, said it has launched reviews into 65 suspected tax cheats based on the leaked documents.

“The CRA will ensure that all Canadian taxpayers identified from the Panama Papers are pursued,” wrote spokesperson Jelica Zdero in an email to the Star confirming the investigations.

These numbers represent the first results of a $444-million investment in the CRA’s enforcement capacities, announced days after the Star and CBC first published the massive leak of offshore corporations and trusts in April.

The CRA confirmed that it had reviewed more than 2,600 records from the Panama Papers, but declined to discuss how it obtained the documents or whether it paid for them, as some European tax agencies have done. It did say that it obtained tens of thousands of supporting documents from foreign governments and court orders to aid the investigations.

To date, 60 formal audits have been launched into Canadians identified in the leaked database of Panamanian law firm Mossack Fonseca.

The CRA also said it has executed search warrants and launched criminal investigations, but declined to be more specific.

“In order to ensure the integrity of our criminal investigative work and to respect the confidentiality provisions of the acts we administer, the CRA does not comment on an investigation that it may or may not be undertaking,” CRA spokesperson Lisa Damien wrote in an email.

Canada loses an estimated $6 billion to 7.8 billion in tax revenues to offshore tax evasion every year. Despite this staggering number, the CRA hasn’t been very successful in prosecuting offshore tax schemes, having convicted only 49 people and levied $13.4 million in fines since 2010.

The U.K. also revealed the results of its Panama Papers crackdown this week.

In response to a question about government action spurred by the leak, Chancellor of the Exchequer Philip Hammond told the House of Commons that 22 people were being formally investigated for civil and criminal tax evasion and 43 more were under review for their links to offshore tax havens.

British authorities have also found nine financial professionals they believe are “potential professional enablers of economic crime,” all of whom have links with known criminals.

Britain’s enforcement efforts have been spearheaded by an inter-agency task force created by then prime minister David Cameron this spring to analyze and pursue those identified in the leak.

The task force identified 26 offshore companies that hide their ownership of U.K. property, saying their financial activity is “potentially suspicious.”

“In its short existence, the task force has added greatly to the U.K.’s understanding of the ever more complex and contrived structures that are being developed to mask offshore tax evasion and economic crime,” Hammond said in a written statement.

“This intelligence will ensure that the U.K. remains uniquely placed to contribute to the international effort to uncover, and take action, on wrongdoing, regardless of how deeply hidden the arrangements are, as well as identify those jurisdictions where regulatory oversight requires improvement.”

Information from the Panama Papers database has also contributed to a number of ongoing investigations into financial crimes, including a major insider trading operation, Hammond said.

Both countries have joined international efforts, co-ordinated by the Organization for Economic Co-operation and Development, to automatically share tax information, creating a network of intelligence that will make it much more difficult to hide money in tax havens.

“The government of Canada firmly believes that hiding income and assets in foreign jurisdictions to avoid paying taxes is a serious issue that robs all hard-working Canadians of important services. By increasing Canada’s collaboration with international partners, we are taking an active role in ensuring a fairer tax system, where tax cheats face consequences for their actions,” Damien wrote.