Hilfskreuzer Möwe wrote:As always, thank you for that excellent review of the subject area, Burnaby49.
One question: are you aware of criminal proceedings against any of the promoters of these tax evasion schemes?
Firstly these were not tax evasion schemes, they were tax avoidance. There is a big distinction since evasion is criminal and avoidance is not. A working definition of tax evasion is:
Deliberate omission of a statutory requirement to reduce or eliminate a tax liability. For example, those participating in tax evasion may under-report taxable receipts or claim expenses that are non-deductible or overstated. Individuals who deliberately conceal income (or businesses that deliberately conceal part of their sales) in order to pay less income tax are engaging in tax evasion. Workers in the underground economy and businesses that fraudulently claim tax refunds are also committing tax evasion.
Tax avoidance can be defined as "The taking of legal actions or omissions with the intent to minimize tax".
The Poriskyites were evading tax because they actively hid, or didn't report, their income from the CRA. They only brought up their claimed beliefs as a defense once they were caught.
These charitable donation schemes were tax avoidance, not evasion. Everything was disclosed by the promoters to the participating taxpayer (whether they read it or not is another issue), property was actually donated, and generally there was at least a semblance of a valuation supporting the claimed value of the donated property. The taxpayers did not hide income, they just claimed excessive deductions based on the schemes but everything was reported to the CRA.
As far as the promoters are concerned I'm not aware of the CRA pursuing any criminal action against them and, as far as I can see, none is applicable. There is no fraud since everything was disclosed. These schemes were not shams, the paperwork and tax planning papers were followed through as written and everything was legally covered including opinion letters from high-powered legal firms. The only recourse against against the promoters that I can see is civil from the taxpayers and that is what they have been pursuing as class-actions. Interestingly enough the focus is in going after the law firms that wrote the opinion letters and the accounting firms that provided valuation opinions. I'm guessing because the promoters have skipped or have no recoverable assets and the law firms are the only deep-pocket stationary targets.