More than 2,000 pages of highly sensitive state records recently filed with the Federal Court reveal details of an internal dispute between the CRAs over the tax agreement. A CRA director wrote in the documents that an executive tried to get them to support the deal, which was “completely immoral and” wrong. “ Despite the fact that some CRA employees disagreed with the regulation – warning that it would lead to lower tax revenues – company executives proceeded with it in 2019, CRA records show. “There could be a negative impact on the reputation as a result of the informal procedure followed,” the CRA’s Department of Home Affairs and Fraud Office said in a preliminary investigation. The CRA defended the deal in a statement to CBC News, saying it was “favorable” to the service and an investigation by the Department of Home Affairs and Fraud Control acquitted those charged with the offenses. However, the agency did not release a copy of this investigation report or name the company involved, citing the privacy rights of staff and taxpayers. Internal documents show that the agreement sparked a torrent of allegations and counterclaims between executives and staff that sparked a series of internal investigations and a settlement to withdraw the punishment claims. Two CRA officials have filed a lawsuit in federal court arguing that the integrity commissioner should not have stopped investigating other allegations of infringement in the CRA, including a toxic work environment. The allegations contained in the documents have not been tested in court. The dispute focuses on a section of the CRA that approves payment arrangements between multinational corporations and the Canadian government to prevent tax evasion. The CRA is sensitive to this issue due to the recent news about Canadians hiding offshore assets in tax havens. The agency also made headlines in the past for a high-level decision to offer amnesty to wealthy KPMG customers arrested for using offshore tax evasion programs in the Isle of Man. The court documents confirm an investigation by the CRA’s Department of Home Affairs and Fraud Control in 2019, according to which three anonymous complaints alleging privileged treatment were made to a ‘leading global company allegedly using aggressive tax avoidance systems to transfer profits from Canada in an Irish tax haven. “ “Please take immediate action to stop this. Agreement which further undermines the integrity of OAPI,” one of the complaints said. The name of the company involved is blacked out in documents filed with the Federal Court, which also do not state what the company does or where it is based. According to court documents, the deal led the CRA to waive the penalties and interest the company would otherwise owe and a controversial advanced pricing (APA) deal. Two CRA officials made similar complaints to the Integrity Commissioner in 2020 and named three CRA executives at the time as key players in approving the deal: Compliance Programs Branch Assistant Commissioner Ted Gallivan, Director General of the International and Large Business Directorate Alexandra MacLean and Director of Services of the Competent Authority Donna O’Connor. Congratulations to Donna O’Connor and the rest of the CASD team for taking many pic .twitter.com / EhBOeVkjvV – @ TedGallivan
These allegations by CRA officials allege that a CASD staffer was “forced to seal” the “multimillion-dollar” agreement without being able to actually review it themselves. One of the complaints alleges that in one case, a CASD executive who refused to support the deal told MacLean that “they had no choice” because “Ted wants this to happen” – a reference to Ted Gallivan. This complainant, a manager, claimed that they did not “play ball” because they felt that the agreement was wrong. In an email to a senior – which was also filed in Federal Court – the complainant claimed that they had been “campaigned” by a director “to force me to leave my job”. One of the complainants compared the case with OAPI which in the past gave special offers to wealthy clients of the accounting company KPMG during settlement agreements which also violated the instructions of OAPI itself. As head of compliance disputes, Gallivan spoke publicly on behalf of the CRA about these allegations in 2016. What has been submitted to the Federal Court is only a summary of the preliminary findings of the investigation which confirm that the agreement started in a “new beginning”. The International Tax Division (ITD) reached an oral agreement with the company that CASD will extend the scope of the multinational company’s APA to cover the period 2016-20, including two years that have already passed, according to the conclusions of the preliminary research.

CRA director insists on “due diligence”

APAs allow companies to avoid annual tax audits and set methodologies for pricing a company’s international transactions. When the dossier reached the unit approving the agreements – CASD – the unit manager then said he “would not honor it” without her team “doing its proper due diligence”, according to the preliminary investigation. CASD staff also disagreed with APA’s expansion to cover previous years and were unable to “conduct their usual investigations” because the other department, ITD, felt it had already done so, he said. the summary of the preliminary findings. MacLean then informed staff that “the agreement will be honored.” This move contradicts the CRA policy according to which unilateral APAs can not have retroactive effect because other countries are not included in the negotiation process, according to the draft final report. A new director at CASD, Donna O’Connor, signed the agreement in November 2019, making it official.

CRA claims the allegations are “unfounded”

The CRA then had to inform the Netherlands and the United States, where the company also operates. Preliminary findings from the study indicate that these countries “may be wondering if and why Canada did not follow its published practice.” The CRA told CBC News that its investigation eventually concluded that the allegations of “unanalyzed” APAs were unfounded and that no staff member was forced to resign because they protested. . “We can state unequivocally that the CRA has thoroughly investigated these allegations of wrongdoing with the participation of a special third party counsel and has deemed them unfounded, with all those alleged perpetrators being eliminated,” the spokeswoman wrote. CRA. Etienne Biram in a statement to CBC News. “Administrative policies have no force of law … the reporting of these allegations has serious implications for the reputation, career and mental health of long-term, dedicated civil servants.” Vern Krishna, a tax lawyer and law professor at the University of Ottawa, said that while what the CRA did was not a criminal offense, it was a “huge deal in international taxation.” “The CRA has honestly misused its discretion,” Krishna said. “Extremely unusual that a remarkable adjustment would take place in this particular company.”

“Background offers” damage the CRA’s reputation, says the expert

Krishna has been honored with the Order of Canada for his contributions to tax law over the past 50 years and has written numerous books on international tax law. He said it’s a big deal for a company to get an APA because it includes tens of millions of dollars internationally. The purpose of the APA, he said, is to reassure multinational companies that they will not be exposed to the threat of audits, ratings and years of litigation. But if other countries dealing with Canada through international tax treaties lose confidence in the CRA’s willingness to follow its own procedures and policies, “it does a great deal of damage,” he said. “When you start making backstage deals and retroactive deals that do not comply with your policies, you are damaging your reputation,” Krishna said. “Damage to reputation is not in the interest of the country.” CLOCKS Tax expert reacts to CRA agreement:

“I’m surprised and in a sense angry”

Tax lawyer and professor Vern Krishna says the CRA secret agreement violated its policy and is a “remarkable adjustment for the company”. 1:17
But Dale Hill, who worked at the CRA for APA during the program in the 1990s, said what the agency did was not a big deal. He now runs a private practice as a partner in Gowlings WLG and negotiates APA on behalf of companies. He specializes in control defense and is not directly involved in the case, he said. “It does not look like a sweet deal,” Hill said, after examining the findings of a preliminary CRA investigation. “There is no financial benefit for the company. “The benefit to the company was an effective solution in their case. That is the only benefit. The benefit to OAPI was that it was able to reallocate resources because the company did not have to go through the whole process of amending tax returns.” Hill said that while he would never question the integrity of the CRA, he did find it unusual to conclude an agreement orally without consulting the approval body. CLOCKS No “sweet deal” in the CRA deal, says tax lawyer:

The agreement did not offer any financial benefit to the company, the lawyer claims

Dale Hill, an associate of Gowling WLG, says the deal appears to be about efficiency. 0:20
Lawyer Scott Wilkie, who …