Finance Committee on June 11th, 2019

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. You can't discuss individual cases. I gather it is inappropriate for any governmental official to do the same. Of course, the head of government, the Prime Minister, has commented on this particular case, as follows:

“We have received assurances that all rules were followed, indeed, the same assurances made in the public statement released by the family, and we are satisfied with those assurances,” Trudeau told reporters during a news conference....

In other words, the Prime Minister has commented on this particular case. Were you aware that the Prime Minister made public comments about exonerating his friend and fundraiser in the matter of the Paradise Papers leaks?

[Bob Hamilton]

Perhaps at this stage I'll turn it over to my colleague to comment on what may or may not have transpired in this case.

[Ted Gallivan]

Yes. If it's helpful, we risk-assess taxpayers, and one of the sources for a risk assessment is media coverage. Every time there is media coverage like that, I would like to presume that my team is already on it, but I don't presume. When there is media coverage like this or a leak like this, we do undertake a systematic risk assessment, which means that if we're not already auditing them, and if we should audit them, we will audit them.

[Pierre Poilievre, Conservative, Carleton, ON]

So the—

[Ted Gallivan]

I can tell you that when there's a public leak like that, that process takes place.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

The question was, were you aware? You're doing this media monitoring. Yes or no, were you aware that the Prime Minister made these comments?

[Ted Gallivan]

Yes.

[Pierre Poilievre, Conservative, Carleton, ON]

You were, so your officials, who are supposed to objectively determine whether someone should be audited, now know that the boss has exonerated that particular individual.

[Ted Gallivan]

I would say that our officials base their judgment on the facts of the case and the evidence provided.

[Pierre Poilievre, Conservative, Carleton, ON]

Right.

[Ted Gallivan]

I can assure you that no direction from me—or higher than me—was provided to the auditors with the carriage of the file.

[Pierre Poilievre, Conservative, Carleton, ON]

Well—

[Ted Gallivan]

They would be making the decision based on the facts in front of them.

[Pierre Poilievre, Conservative, Carleton, ON]

No, you can't assure us of that, because someone higher than you would include the Prime Minister, who is the head of the government, and he has already made public statements exonerating the taxpayer in question, his friend and billionaire fundraiser, in a statement that you admit that your officials have read.

Obviously the matter is biased, because the head of government has made public comments that your officials have read and, whether they admit it or not, have in the back of their minds when they decide whether to take action against this particular billionaire Liberal insider.

Now I'll move on to another issue.

[The Chair, Liberal, Wayne Easter]

We'll have to move on.

Mr. Gallivan, do you have an answer?

[Pierre Poilievre, Conservative, Carleton, ON]

Actually, I didn't have a question.

[The Chair, Liberal, Wayne Easter]

Mr. Gallivan can respond to that question, because you made accusations for both the CRA and the Prime Minister, and they have a right to respond as public servants in terms of the CRA and an agency, and they're going to respond.

[Bob Hamilton]

All I can say is, on behalf of the agency, where the auditors look at a case, they have a focus on the facts as they see them, on the information that's provided, in doing the risk assessment or ultimately if there is an audit. I can give you that assurance.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today. I am very disappointed that the minister did not give us the opportunity to ask her questions. She came to testify about the main estimates for 2016-17, 2017-18 and 2018-19, but she did not want to appear before our committee to defend the 2019-20 main estimates.

That being said, I would now like to turn to the KPMG case. You probably expected that. I discussed this with you, Mr. Gallivan, as recently as last February. I don't know if you're the one who can answer my questions. You made the following comments at the time, which are public:

Then there's the fact that some participants [in the KPMG case] objected to the Tax Court of Canada. It will be up to the judges of that court to decide whether the behaviour of those participants was consistent with the law.

Last week, we learned that the Canada Revenue Agency had reached an agreement, an out-of-court settlement, to close the file. In the end, no judge will have pronounced on the behaviour of these participants. Yet the minister said that there was no amnesty in the KPMG case and that there would never be one. However, for me, this corresponds more or less exactly to the definition of an amnesty. We may not agree on that.

In any event, I would like to know who, in the KPMG case, made the decision to settle out of court with these participants.

[Ted Gallivan]

I would like to begin by noting that this file was the responsibility of the appeals branch, but that several sectors of the agency were consulted to reach this conclusion.

We do not consider amicable settlements to be amnesties. This aspect of the dispute is not optional. A settlement process is followed. When a taxpayer makes an offer that eliminates the risk of the agency losing everything, we have an obligation to resolve the matter.

The minister has made it clear that lack of transparency is a concern for her. We want to adopt a more formal approach that emphasizes transparency. When you don't have all the details, you have to debate whether or not it's an amnesty. That is why the minister asked that the agency find a way to increase transparency.

With regard to the KPMG case, on the strategic side, taxpayers no longer resort to such a scheme. I can confirm that, to date, we have identified $24 million in contributions from these taxpayers. There are still a few taxpayers who are challenging this in court. Our employees analyze the facts and risks and then make the best possible decision.

I can assure you that decisions are made as a team, not by one or two employees, in secret. They are based on the law and the facts of the case, as well as our expectations of court decisions. The Tax Court of Canada is a specialized court in Canada. The judges of this court give us some good clues as to what we can expect.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

So it is the appeals branch, in consultation...

Was the minister informed before this was signed? If so, when?

[Ted Gallivan]

I do not think the minister was informed. However, I cannot say that because that does not fall under my purview.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

In her comments, the minister said that in her view this settlement was not appropriate; her opinion is clear. She said that it lacked transparency, and I think we all agree on that. Obviously, she does not control what happens in her department.

Can you say that this is an independent decision made by the agency, when it should instead make this case an example to send a clear message to all Canadians that cheating is criminal?

[Ted Gallivan]

The role of...