From: AlanBaggett@volcanomail.com   
      
   CRA convicts a fraction of offshore tax evaders: Exclusive : CRA SOTW   
      
   Documents obtained by the Star show Canada is lagging far behind other   
   countries in convicting tax cheats who exploit offshore tax havens.   
      
   By Marco Chown OvedForeign Affairs Reporter   
      
   As worldwide pressure grows to fight offshore tax evasion, new statistics   
   obtained by the Star show the Canadian government has convicted only 49 people   
   and levied just $13.4 million in fines for what it calls offshore activity   
   since 2010.   
      
   These numbers are far lower than in comparable countries and show the Canada   
   Revenue Agency recovers only a tiny fraction of the estimated $6 to $7.8   
   billion in taxes Canada loses to offshore tax havens each year.   
      
   Experts say the new data reflects the Canada Revenue Agency’s inability to   
   unravel the complex offshore structures that allow wealthy individuals to   
   avoid paying tax.    
      
   “These numbers probably reflect a lack of resources at the CRA because there   
   certainly hasn’t been a decrease in tax evasion,” said Dennis Howlett,   
   executive director of Canadians for Tax Fairness. “The biggest tax evaders   
   are doing it offshore.    
   That’s what we’ve been saying for years and that’s where they should be   
   concentrating their efforts.”   
   Between 2010 and 2015, 662 people were convicted for tax evasion or tax fraud   
   overall, but only 49 had “money and other assets located offshore,”   
   according to documents provided to the Star.   
      
   Despite representing only 7 per cent of convictions, these tax cheats evaded,   
   on average, three times more tax, received fines three times as large and were   
   sentenced to jail terms three times as long as domestic tax dodgers.    
      
   Even with these numbers, it’s difficult to get a clear picture of how   
   seriously the government pursues offshore tax cheats because the CRA appears   
   to employ an overly broad definition of “offshore” that includes cases   
   with any link to a foreign    
   country.   
      
   Outside of the CRA, the term is generally understood to refer specifically to   
   the use of tax havens, experts say.   
      
   “The CRA is defining offshore very broadly,” said Howlett. “The fact   
   that some of these convictions have nothing to do with tax havens is   
   consistent with what we’ve been hearing from CRA staff.”   
      
   The Panama Papers leak has detailed how the use of shell companies in tax   
   havens deprives public tax coffers of billions of dollars each year. While   
   other governments have devoted significant resources to cracking down on bank   
   secrecy and offshore tax    
   schemes, Canada’s efforts appear to have paled in comparison.   
      
   Australia’s Project Wickenby has collected more than $600 million from   
   cheats using tax havens since 2006. The U.K. has recouped more than £2   
   billion ($3.5 billion) from offshore tax evasion since 2010.    
      
   In contrast, Canada has only handed out fines totalling $13.4 million since   
   2010 — less than half the $35.7 million in taxes the cheats were caught   
   evading.    
      
   “This doesn’t make any sense,” said tax lawyer Jonathan Garbutt. “The   
   law states that the minimum fine for tax evasion must be 50 per cent of the   
   amount of tax owing. And judges often fine 75 or 100 per cent.”   
      
   The CRA did not respond to questions about the unusually low fines.    
      
   Over the last five years, the CRA overall number of tax evasion convictions   
   has dropped by more than half, but the number of offshore convictions has   
   remained fairly stable.    
   Critics say this reflects the layoffs of about 300 tax auditors after the   
   Conservative government imposed a two-year budget freeze in 2014. But agency   
   spokesperson David Walters said it is due to a change in emphasis at the CRA,   
   “to strengthen our    
   ability to criminally prosecute those who commit tax crimes, targeting the   
   most egregious offenders.”    
      
   “The number of convictions has decreased since the changes were implemented,   
   however other metrics confirm that the strategic shift is working,   
   particularly in relation to offshore convictions, as evidenced by an increase   
   in jail sentences and court    
   fines,” Walters wrote in an email.   
      
   Because court records are public information, the Star requested the names of   
   the convicted offshore tax evaders through Access to Information legislation.   
   The documents released by the CRA, show 31 separate convictions for tax   
   evasion with an “   
   offshore component.”    
      
   It’s too early to measure whether these new efforts have paid dividends, but   
   critics question the way the CRA categorizes a case as “offshore.”   
      
   One conviction listed on the CRA’s list of offshore tax cheats is Vaughan   
   tax preparer Doreen Tennina. In 2013, she was found guilty of tax fraud for   
   claiming more than $58 million in fake carrying charges and charitable   
   donations on tax returns for    
   her clients.    
      
   Tennina’s tax scheme didn’t have any reported offshore elements. Her only   
   international links were two properties she owned in Spain.   
      
   This is where she fled during her trial in 2011. Two years later, she was   
   arrested in the Canary Islands before being extradited back to Canada last   
   year. She is now serving a 10-year prison sentence. The CRA considers her an   
   “offshore” tax cheat.   
      
   “They’re confusing offshore with overseas or cross-border,” said   
   Nicholas Shaxson, an investigative journalist and author of two books on tax   
   havens and international tax evasion.    
      
   The term offshore, Shaxson says, refers specifically to the use of tax havens,   
   where secrecy makes it difficult for authorities to follow transfers of cash   
   through opaque shell companies and trusts.   
      
   “They’re talking about overseas and they’re trying to conflate it with   
   offshore, but offshore is a very particular aspect of international finance   
   and the two should not be confused.”   
      
   Of the 31 cases revealed to the Star, the CRA provided names to just 13 cases   
   involves 19 people. Of these only six had an identifiable connection to   
   offshore tax havens.   
      
   The rest of the case names and all of the case numbers were redacted, making   
   it impossible to determine the identity of the unnamed offshore tax cheats.   
      
   The CRA keeps these tax cheats’ identities secret because the link to   
   offshore activity in their cases is only evident in confidential tax filings   
   and not a part of the public court record, Walters said.   
      
   But legal experts disagree.   
      
      
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