The Queen, Trudeau linked to 'Paradise Papers' investments

Canadian investors face CRA probe into offshore holdings

The Queen, Trudeau linked to 'Paradise Papers' investments
Steve Randall
The Queen is among investors who have been embarrassed by revelations from an investigation into offshore investments by individuals, corporations and hedge funds.

A fundraiser for prime minister Justin Trudeau is also linked to the global probe by journalists. Bloomberg says that Montreal businessman Stephen Bronfman is included in the names who may be using offshore accounts to shelter money.

While no illegal activity or wrongdoing has been alleged or proven, the Canada Revenue Agency says that any individual or organization that has broken regulations and laws will be held accountable.

The revelations about the investments of thousands of wealthy individuals, companies, funds and trusts from all over the world have become public following the leak of more than 13 million files from two service companies and company registries from 19 tax havens.

The Queen’s investments are through her private Duchy of Lancaster estate from which she derives her income and voluntarily pays UK tax. The Duchy held or still holds investments in the Cayman Islands and Bermuda.

The so-called Paradise Papers also reveal that the Duchy holds shares in British retailer Brighthouse, which has been criticized for high-interest payments charged to the low-income customers who are its key customer base.

A Duchy spokesperson said this investment was negligible and said it was not involved in fund investment decisions.

"The Duchy has only invested in highly regarded private equity funds following a strong recommendation from our investment consultants," Duchy CFO Chris Adcock told the BBC.

The spokesperson said that the Duchy invests in many funds and only a few are overseas. It also says that its offshore investments were not part of a strategy to pay lower taxes.

CRA probe
The Canada Revenue Agency says that it will investigate the use of offshore funds by Canadian investors.

The Paradise Papers include financial details of former Canadian prime ministers Brian Mulroney, Paul Martin and Jean Chretien – although no wrongdoing has been suggested.

In a statement, the CRA said that the government has invested $1 billion to tackle tax evasion and avoidance and currently has more than 990 audits and 42 criminal investigations underway as a result of its activities.

“The CRA is ensuring that those who choose to break the law face the consequences and are held accountable, starting with tax professionals who facilitate non-compliance - the CRA levied more than $44 million in third-party penalties on tax advisors last year and there are presently a number of criminal cases under way. The Agency has a full-time dedicated unit focused on offshore non-compliance and we are reviewing money transfers over $10,000 between Canada and four offshore jurisdictions such as the Isle of Man. In addition, the CRA is risk-assessing 100% of large multinational corporations, analyzing the tax affairs of risky high-net worth taxpayers, and working with credible paid informants.” – CRA Statement

The agency says tax avoidance and tax evasion are global issues and it is working with international partners to tackle the issue with a multi-jurisdictional approach.