Officials inside one of the largest accounting firms operating in Canada debated the possibility that its Isle of Man tax dodge could violate the Canadian Income Tax Act, according to a series of emails and reports from within the firm.
KPMG, known as one of the Big Four accounting firms, ran the controversial tax avoidance scheme for high-net-worth clients for more than a decade before it was eventually detected by auditors for the Canada Revenue Agency in 2012.
The CRA has argued in court documents that the scheme, which involved the creation of shell companies based on the Isle of Man, was "intended to deceive" authorities and was a "sham."
KPMG handed over hundreds of pages of confidential, internal documents to the federal finance committee last month as part of a parliamentary probe into the scheme.
Despite the concerns raised by unnamed tax accountants at KPMG, the offshore tax scheme was eventually given the green light and was marketed across the country to wealthy Canadians as a way to pay "no tax" on investment income and maintain "confidentiality."
The committee is also looking into why federal authorities offered an amnesty without penalty last year to the wealthy KPMG clients caught using the offshore tax dodge. Details of the offer, which CRA demanded be kept secret, were leaked to the media.
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