Evidence of meeting #17 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was kpmg.
A video is available from Parliament.
11:25 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you.
Do you think that kind of behaviour—putting investments in an offshore company, then getting it back here to Canada as a gift from one company to another company—is moral?
11:25 a.m.
Partner, KPMG
I think you have to look at it through two different lenses. If you think about the way the Canadian tax rules have evolved, in 1999 there were opportunities for taxpayers to use non-resident trusts to effect tax-planning objectives, and those were under the scrutiny of the Department of Finance for quite some time. The rules were changed with respect to non-resident trusts in 2013, retroactive to January 1, 2007, so from the time that this particular plan was developed, there were 13 or 14 years before the legislation actually shut down some of that similar planning. It was retroactive to January 1, 2007, but it wasn't until—
11:25 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you, but I'm sorry, my question was whether you think it's moral to do that. What is your standard in KPMG? Is it legality, or is morality also playing a role in what you develop as a scheme?
11:25 a.m.
Partner, KPMG
That's the third lens I talked about, the responsibility. Does it have the right fit for our clients? Does it have the right fit for us? Does it fit within our global code of conduct?
We determined back in 2003 that it was something we were no longer prepared to implement as an organization. In today's light, absolutely, but back in 2003 that was the time when we suggested that was not something we were prepared to do.
11:25 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
So now in 2016 do you think it's not appropriate to develop a scheme like that today?
11:25 a.m.
Partner, KPMG
If we decided in 2003 that we were no longer going to implement that plan, absolutely we would not implement that plan today.
11:25 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you.
Now I'm going to switch to French, Mr. Chair.
Was the Canada Revenue Agency involved in developing the Isle of Man scheme? If so, who at the CRA was involved in signing off on the scheme?
11:30 a.m.
Partner, KPMG
The plan was developed in 1999. There was nobody from CRA involved in the development of that plan.
11:30 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Do you contact the CRA from time to time to check whether certain schemes are legal and to have them approved? How many other tax schemes like this one do you have with known tax havens?
11:30 a.m.
Partner, KPMG
As I mentioned earlier, there are times when we will seek advance tax rulings on behalf of our clients. That's pretty rare.
To your second question, in the way the tax law in Canada has changed, and the way the world on tax law has changed, there are two elements. There is business taxation for multinationals, and there's taxation for individuals.
In Canada, multinational corporations are expected to pay the tax that is owed in Canada on the profits that they make in Canada. To this day, there still is a lot of use of non-resident jurisdictions outside of the Canadian tax system, and that is fine by government policy as long as the income earned in Canada by the multinational corporation is taxed in Canada.
For individuals, with the way the world has evolved today, including some of the legislative changes around non-resident trusts that took place in 2013 and a final change in 2014, individual citizens of Canada are expected to pay tax in Canada on their worldwide income regardless of where it's earned.
That's the way the rules have evolved. That's the way the system has evolved. As you know from filing your tax return—hopefully within the last few days—on the second page you have to actually tick off whether or not you have more than $100,000 worth of property located outside of Canada. It's on that basis that our plans are effective today.
11:30 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you.
I have another question. If you are aware of something illegal, and you have the name of the people who are involved in that, would you be able to provide the names of those people who commit illegal activity?
11:30 a.m.
Partner, KPMG
There are professional rules. I'm speculating a little bit, but I believe that's our obligation if we believe it's illegal.
11:30 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Yes.
With that, Mr. Chair, I would like to move a motion:
That the committee compel KPMG to provide documents indicating the names of clients who used the Isle of Man tax sheltering scheme, and the names of the KPMG employees responsible for the development and marketing of the tax scheme.
11:30 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Yes, I do. It is related to the issue we're discussing right now.
11:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Yes. There may be an implication on the court here that we'll have a look at as well.
Phil, I'll let you in.
11:30 a.m.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
On a point of order, Mr. Chair.
The normal procedure is a 48-hour notice on any motions, and so this motion has come without that notice, I believe. We have not received it so I want to note that as a concern.
11:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Mr. Dusseault, you can table the motion with the committee, and we can consider this as the opening notice of the motion.
Go ahead.
11:30 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Mr. Chair, just to clarify, when we are discussing an issue, we can move a motion related to that issue, so I'd like to discuss it right now and have it voted on.
11:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Okay, you are correct. When an issue is before committee, you can move a motion at committee. We'll distribute the motion, and then we will talk about it.
11:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Just wait until we get the motion.
What I'm going to do is basically rule it out of order at this time.
We will talk about it at the business of the committee at 12:30. The reason I would do that, Mr. Dusseault, is that under the sub judice convention, this request could have implications on a court case. I don't believe we can deal with it at this time, so I'm going to rule it out of order.
We will talk about it in committee business. If you want to challenge the chair on that, you can, but I do believe this might have implications on a court case that's ongoing.
11:35 a.m.
Liberal
