Legislative illumination should be applied to the darkness that shrouds ownership of property in Canada and the offshore outflow of business revenue.
As chronicled in “Documents Leak Turns Up Heat on Canadian Tax Loopholes” (Business in Vancouver issue 1467; December 12–18), Canada needs tighter rules governing how Canadian corporate entities are established in tax-free jurisdictions that bleed taxable income from this country. Much debate has swirled around Ottawa’s plans to limit private corporations’ ability to reduce tax by sharing income with family members. But there has been far less debate over whether changes to Canada Revenue Agency’s Voluntary Disclosures Program that eliminate taxpayer amnesty for companies and individuals who admit to having undeclared income would recover more lost tax revenue or drive it further offshore.
Elsewhere, a Publish What You Pay Canada (PWYPC) report released in December includes a laundry list of issues in Canada that make it more difficult for the public to determine the ownership of major assets and easier for them to be used in money laundering and other crimes.
The report notes that “an effective anti-money-laundering and terrorism financing regime would legally require all trustees, agents and nominees to disclose their status to government officials, financial institutions and designated non-financial businesses and professions.”
But that’s not the case in Canada.
The PWYPC report notes that powers of attorney are frequently used to obscure true ownership and “perpetrate real estate fraud.” It also points out that “trust laws in Canada easily allow for the abuse of trusts to obscure true ownership or control for criminal purposes.”
The federal government has much work to do to ensure that corporations and individuals pay their fair share of tax to support the services, infrastructure and other elements that contribute to Canada’s standard of living. Illuminating the murk surrounding offshore tax havens and beneficial ownership should be a top priority in that initiative.
