Lack of transparency leaves CRA empty-handed as it attempts to collect nearly $5 million in taxes from businessman | CBC News (2023)

He is a self-proclaimed money manager for the ultra-rich, with a penchant for expensive champagne and an eight-figure personal net worth.

But Charles Shaker also has a tendency to not pay his taxes, says the Canada Revenue Agency (CRA). And thanks to the lack of transparency, in tax havens but also in Canada, about who owns what types of assets, it's been hard for the CRA to do anything about it.

Shaker, Anglo-Canadian financial advisertabloidholdersIn 2013, when he ordered a $500,000 round of sparkling wine of his choice for attendees of a Formula 1 party in Monaco. The incident was later featured on a CNBC show titledThe filthy rich guide.

What the news didn't reveal was that, around the same time, accountants in Ottawa were digging into his finances, largely because his name was on a whistleblower list of 130,000 people and organizations.with connections to sensitive accountsin the private bank of HSBC in Geneva.

Shaker already had a relatively modest balance of $32,797 at the time, court records show. But after reviewing his file, CRA accountants gave the billionaire an updated bill for $3.8 million in 2017.

• HSBC Private Swiss Bank used by several Canadian billionaires

Five years later, Shaker, who moved to England from the Ottawa area in 2009 and settled in Monaco around 2015, has not paid, the CRA says in court documents. With interest, his account now totals more than $4.8 million.

He says it's the first time he's heard of it and he's going to challenge the amount.

“The CRA has not contacted me since the alleged reassessments leading to the alleged tax liability were prepared,” the 42-year-old said in court testimony.

"The CRA has made consistent mailing errors over the years."

CRA fails to generate hedge income

The dispute is pending in Federal Court.

In early November, the government filed a motion to compel Shaker's acting attorney in Ottawa, Chadwick Boyd, to provide information about a luxury penthouse in downtown Toronto titled to Boyd, Shaker and another man. .

If Shaker did in fact own part of the condo, the CRA could go after him to collect his back taxes.

Weeks after the CRA unsuccessfully tried to obtain Boyd's records, the penthouse and another in downtown Toronto were opened. Both sold over New Years, one for $2.5 million and the other for $1.8 million, and closed two weeks ago.

The CRA went to court again, this time seeking a reduction in the proceeds of the sale, arguing that Shaker had an interest in both properties, which could be used for his alleged $4.8 million in back taxes.

But the government ran into a problem: The penthouses were being held in escrow, an arrangement whereby one or more people have legal ownership of an asset, but only for the benefit of others. One of the condos was owned by Shaker, Boyd and another man from the Richie Rich Holdings Trust and the other by an entity called the Vinyl Spin Investment Trust.

Court records show that since at least 2015, the CRA has unsuccessfully tried to get Shaker and others to provide information about the trusts and the true beneficiaries. Without that information, the agency could not prove that Shaker was a beneficial owner, and he himself said in an affidavit that he had "no personal interest" in any of the properties. So a judge refused to allow the CRA to touch the proceeds.

"Mr. Shaker is a debtor in his personal capacity and not in his capacity as trustee of the RRH Trust," Federal Court Judge Elizabeth Walker ruled March 24 that the debt in question is the trustee's personal fault.

Ironically, he ordered the government to pay Shaker $12,000 for his legal fees.

Pandora Papers leak reveals $4 million London apartment

The federal treasury must now look elsewhere for assets to seize. But that could be even more difficult than the government's failed attempt to crack down on Toronto condos.

Records of a variety of offshore financial data provided to CBC News through its partnership with the Washington-based International Consortium of Investigative Journalists show that Shaker at one point owned or had directors of several offshore companies in the Islands. British Virgins in Barbados.

He is inPandora papers leaksince last fall, when CBC News put its name on a British Virgin Islands company called Branstead Ltd.

Officially, this company has other people who appear to be acting as "nominees" or attorneys signing their names on paper as directors and shareholders, essentially fronts for the actual owner. The only shareholder, on paper, is another company called Monet Investment Ltd. with an address in the Seychelles, according to the Pandora documents files.

But one of the leaked documents is a 2017 form from an offshore service provider called the Trident Trust, which claims that Shaker is the "beneficial" or actual owner of Branstead Ltd. The company's stated business is "real estate."

It is legal to use designated directors and shareholders in most jurisdictions, including Canada, but hiding the people who actually control a company and its assets is often a tactic, especially in tax havens.

Branstead Ltd owns a penthouse in London's Canary Wharf area that was bought in 2010 for the equivalent of $4 million, UK property documents show.

The CRA told CBC News that, in general, it could use terms inCanada tax treaty with Great Britaintrying to collect a tax debt from someone living in England.

Without access to the Pandora Papers leak, however, the CRA would almost certainly not be able to connect Shaker to the multi-million dollar London apartment.

That's because Britain, like most of Canada, doesn't record the identities of the beneficial owners of property (the true owners behind corporate layers or trusts) on its land registry. And the British Virgin Islands, like most other countries in the world, do not require companies to disclose who their true shareholders are.

“CRAs' hands are tied because they simply don't have the tools to track these assets globally,” said Kevin Comeau, attorney and corporate transparency expert.

Public records would help CRA, lawyer says

ate with himnumeroustransparency groups, has advocated for years for Canadian states and provinces to establish beneficial ownership registries that publicly record actual landowners and significant interests in private companies.

This would not only help combat money laundering by potentially revealing where criminals or their known associates are dumping illicit proceeds, but on the tax front, tax authorities like the CRA could "provide much more information and a way to trace those funds." "from people, who may not be paying their fair share, she said.

british columbiais the only jurisdiction in Canada with a Subsequently Established Real Property Beneficial RegistryImportant information about money launderingin the provincial real estate sector.

Meanwhile, the federal government has committed to implementing one for businesses by the end of 2023,as part of the dealbetween the liberal minority and the NDP.

Shaker 'denies any claim or implication'

The CRA declined to comment on its legal dispute with financial adviser Shaker, citing strict taxpayer confidentiality rules.

But overall, initiatives to promote transparency are "a positive step" in helping to enforce tax laws.

"Having access to information about the true owners, beneficiaries, officers or related parties of a business or asset puts tax administrations around the world in a better position to narrow down the network of high net worth individuals, businesses and corporations that they try to… .avoid paying a fair share of taxes," the CRA said in a statement.

CBC News sent Shaker and his lawyers a list of preliminary questions and inquiries, including the fact that his offshore company, Branstead Ltd., will appoint nominee directors and shareholders and that this would affect the CRA's ability to collect any tax debt it owes.

They did not respond to specific questions, but one of those lawyers responded extensively last week that Shaker "disputes all of the allegations or implications listed on his list of questions" and that he "will pursue his case until a final judgment is obtained in court."

Send tips about this or any other story tozach.dubinsky@cbc.caor call 416-205-7553.