We’ve all been waiting for this, so finally! Remember the Panama Papers? Wouldn’t you just love to know who is behind the richest corporations in Canada?
Canada has been one of the most efficient tax havens, harbouring multimillion dollar corporations protected by confidentiality clauses on who really owns them. It could be the most corrupt business people in the world, super rich tax dodgers, Russian oligarchs, we wouldn’t know. It is easier to set up a shell company in Canada than renew your health card, with less scrutiny than is required for getting a library card, and intricate tax planning allows for minimizing interest, dividends, capital gains, retirement income and rental income.
Even the notorious tax havens like Bermuda, the Cayman Islands and the British Virgin Islands - shielding billions in illegitimate funds - have more corporate transparency than Canada.
The beneficial ownership protection that offers non-financial businesses and professions anonymity has contributed to the inflation of real estate prices, crippling the housing market and putting a burden on the Canadian economy.
Well that is going to change soon, with the federal government’s new initiative to create a public beneficial ownership registry by the end of 2023, which takes the anonymity out of corporate ownership to prevent foul play and fraud. Public registries are powerful tools to fight “Snow-washing” which is another name for money laundering. The “End Snow-Washing Coalition” – consisting of Transparency International Canada, Publish What You Pay Canada, and Canadians for Tax Fairness - reported that every year between $45 billion and $113 billion CDN is laundered through the economy.
Transparency International Canada plans to have a free-to-use registry online accessible by everyone, together with downloadable and verifiable information.
FINTRAC, Canada’s anti-money laundering agency, which receives millions of suspicious transaction reports, only had a handful of prosecutions over the last five years, even though we know that countless transactions slip through the door unchecked, as corruption breeds underground even in the most democratic countries.
According to Vanessa Iafolla, a professor at Saint Mary’s University who studies financial crime, “If we are going to put this into use, I think we need to make sure that the people responsible for investigating actually use it to serve the aims of justice.”
Implementing a public registry for beneficial ownership will no doubt go a long way towards curtailing all the money laundering that happens in Canada! But let’s wait and see…
In the meantime, if you haven’t reported your corporate income yet, and would like to catch up on your company’s transparency – we will help you file a Voluntary Disclosure Program application which will present your tax case in a favorable light with the Canada Revenue Agency. And the sooner you do that, the better your odds. Coffee on me.