Audit initiated based on findings of Panama Papers
Published Mar 22, 2023 • Last updated 15 hours ago • 3 minute read
The Canada Revenue Agency initiated an audit of David Goldhar’s returns for 2006 to 2013 in response to findings of the Panama Papers, published by the International Consortium of Investigative Journalists. Photo by Adrian Wyld/The Canadian Press A Canadian in the toy business has won his appeal of a $1.2 million tax reassessment by the Canada Revenue Agency that was triggered by a report from the journalism consortium behind the Panama Papers.
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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors In a March 10 decision, the Tax Court of Canada found that the appellant, David Goldhar, took steps to accurately file his tax returns and the penalties assessed by the minister of national revenue were not properly imposed.
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“It is my view that Mr. Goldhar has established that he took all reasonable steps and was not negligent in filing his tax returns, including form T1134 in each of his 2008-2011 taxation years,” Justice Henry Visser wrote in his decision.
Visser said Goldhar, with the help of his wife, had provided all requested information to his accountants each year and made reasonable efforts to ensure that his tax returns were filed accurately.
“It is also my view that the care he exercised was that of a wise and prudent person,” he wrote.
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Article content The Canada Revenue Agency initiated an audit of Goldhar’s returns for 2006 to 2013 in response to findings of the International Consortium of Investigative Journalists, which published the Panama Papers, Pandora Papers and Offshore Leaks. The ruling did not indicate the specific report that sparked the CRA’s review.
The information the CRA obtained alleged Goldhar was the sole shareholder of a British Virgin Island corporation, which then resulted in the agency sending an initial audit questionnaire around August 2014, the court said.
Goldhar and his business colleagues had set up complex corporate structures to carry on his toy business, which included corporations and partnerships in Canada, the British Virgin Islands and Hong Kong, the court documents said.
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Article content After a reassessment for 2008 to 2011, the CRA increased Goldhar’s income by over $5.5 million and imposed almost $1.3 million in penalties, according to the documents.
The minister of national revenue alleged Goldhar made misrepresentations in each of his 2008 to 2011 taxation years that were attributable to neglect, carelessness or wilful default, the court said. The tax court disagreed with this finding, however.
“It is my view that none of the referenced T1134 penalties assessed by the Minister in respect of Mr. Goldhar’s 2008 to 2011 taxation years were properly imposed, and all should accordingly be vacated,” Visser wrote.
The judge said that due to the complexity of Goldhar’s financial affairs, as well as his lack of tax background, he believes the businessman had reasonably relied on his accountants to properly file his tax returns in each of his 2008 to 2011 taxation years.
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Article content He added that the deficiency in Goldhar’s fillings was “not due to a lack of reasonable efforts he undertook.”
Visser also ordered the government to award Goldhar costs within 30 days from when an agreement between parties is reached.
In recent years, the CRA has made efforts to increase its scrutiny of offshore financial arrangements that could be used to reduce taxes.
In 2013, the agency said it would investigate the files of potentially hundreds of Canadians included in a massive leak of financial information on offshore tax havens released by the journalism consortium.
High interest rates mean don’t be late if you pay tax by instalments CRA generally lets you claim family medical expenses — not this time CRA actively looking for people who day trade in their TFSAs The agency urged the consortium to provide information on the Canadians so it could begin a review.
“CRA officials will review any information they receive and aggressively pursue all suspected cases of tax evasion,” then National Revenue Minister Gail Shea said.
“We call on the International Consortium of Investigative Journalists to hand over this list to allow our government to crack down on tax evaders.”
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