The Canadian Press
Canada’s largest brokerage firm says it has always acted within the law despite accusations by the Canada Revenue Agency that some of the firm’s advisers helped clients dodge taxes by hiding wealth in the tiny principality of Liechtenstein.
The CRA has filed court documents indicating the agency is conducting audits involving Colin Ross, a former vice-president of RBC Dominion Securities Inc. and other investment advisors at the firm.
Two affidavits filed by Russell Lyon, a CRA auditor in B.C., listed several RBCDS clients who had set up foundations in Liechtenstein that were managed through accounts at the firm’s office in Lausanne, Switzerland.
The office would file tax forms for the account, but because the owner appeared as a foundation, capital gains and interest income from bonds were never reported.
The revenue agency has tried since 2007, with limited success, to obtain information from the firm about the investments made by Ross and other advisers on behalf of clients. It has twice asked federal judges to force the company to comply.
Lyon said in an affidavit filed in August that, based on ongoing audits, he believes there are other “Canadian taxpayer clients of RBCDS who also used Liechtenstein entities to hide investments and other income from the CRA.”
He claimed that printed information was available to investment advisers at the firm to assist clients with offshore investments. He believes other advisers assisted Canadians in setting up the offshore accounts.
RBC Dominion Securities Inc. CEO David Agnew said in a written statement that the firm complies with all CRA requirements, adding “there has never been any allegation of wrongdoing on the part of RBC Dominion Securities in this matter.”
“As a firm, we have never encouraged Canadians — not 25 years ago and not today — to set up entities in Liechtenstein, and we have never instructed our investment advisers to recommend that practice,” Agnew said.
“We have been working closely with the Canada Revenue Agency (CRA) to assist them with their current inquiries into these client activities.”
It’s legal to invest outside of Canada, but it is illegal for individuals not to report the income to the CRA.
“Every Canadian client is responsible for reporting their income and capital gains to CRA based on the forms we provide,” Agnew said.
No charges have been laid and the allegations have not been proven in court.
LGT, Liechtenstein’s largest financial institution, describes itself as a “wealth & asset management group owned by the Princely House of Liechtenstein,” providing “access to innovative investment strategies.”
In November, Liechtenstein was removed from the OECD’s grey list of countries with questionable banking practices after it announced it would adhere to the OECD standards of transparency in tax matters. The principality has signed information exchange agreements with 12 countries, but Canada is not yet one of them.
The CRA documents said information about the offshore scheme was obtained from an unnamed “confidential informant.”
Whistleblower Heinrich Kieber, a former employee of the LGT Bank, sparked a global investigation in 2006 after leaking 12,000 pages of bank documents detailing secret, multi-million-dollar accounts.
He provided details to government officials in England, Germany, the United States and other countries on citizens who allegedly hid wealth and evaded taxes through the bank.
Kieber testified before a U.S. Senate hearing last year that the bank’s efforts to provide clients with secrecy and anonymity left it ignorant about the sources of wealth for a majority of its clients.
LGT, Liechtenstein’s largest financial institution, describes itself as a “wealth & asset management group owned by the Princely House of Liechtenstein,” providing “access to innovative investment strategies.”
RBC DS probed in hidden wealth audit
CRA conducting audits involving advisors at the firm
- By: Sunny Freeman
- December 14, 2009 December 14, 2009
- 14:27