Finance committee  Yes, that has been my experience by far. From a tax perspective, I think very few cases actually go to court. The Income Tax Act, like all law, is subject to interpretation, and there can be two sides to a story. When I advise clients, I know that from a client perspective they will often try to settle without going to court.

Finance committee  The plan was developed in 1999. There was nobody from CRA involved in the development of that plan.

Finance committee  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.

Finance committee  There are professional rules. I'm speculating a little bit, but I believe that's our obligation if we believe it's illegal.

Finance committee  Just to be clear, the tax aspects of this plan were fully vetted by the firm, by various committees within the firm, and they fully comply with the tax law. Not one, but two, outside legal opinions also support that assertation.

Finance committee  There are a couple of jurisdictions that have actually enabled that, and I don't think it's unhealthy at all. I stand behind the quality of our people and the quality of work we do. If there are tax advisers out there who are skirting the law, which is something that we never do, should there be consequences?

Finance committee  Absolutely. Thinking about the steps that we go through with that particular tax plan.... First of all it went through a detailed technical review by a first partner. Then it went through a detailed technical review by a second partner, and then it went through a review by our general anti-avoidance committee.

Finance committee  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.

Finance committee  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.

Finance committee  If we decided in 2003 that we were no longer going to implement that plan, absolutely we would not implement that plan today.

Finance committee  I think that's part of it. If you go back in the history of taxation, I see it now that there are three lenses. At one time there was only one lens: was it legally effective, yes or no? If it was legally effective, yes or no, then it was an effective tax plan and away you went. In 1988, the Department of Finance introduced a general anti-avoidance rule, which brought a different concept into the whole idea of taxation and really started to change behaviour.

Finance committee  I don't know what you define “a lot” to be.

Finance committee  Last count, of the 1,400 tax professionals we have in KPMG Canada, I could count seven or eight who have come from there, and probably as many have gone from our organization to the CRA or the Department of Justice. I think it's healthy. Frankly, I think the only way our system works in Canada is to have open and transparent dialogue between taxpayers, tax authorities, and tax advisers.

Finance committee  You can get advance tax rulings. In this particular case, we sought and obtained two legal opinions—

Finance committee  —but there was no advance tax ruling in respect of this.