Exposed: Tax-Sheltering Scheme To Keep Money From Ex-Spouses

On behalf of Peterson Stark Scott posted in Divorce on June 14, 2016.

Divorced parties are naturally concerned about limiting their payout to ex-spouses wherever possible, but news is surfacing about the extent that some individuals have been willing to go in an effort to reach their aims.

Over $130 Million Hidden

At the center of the controversy is a secret investment vehicle offered by major accounting firm KPMG. In place for over a decade, the scheme helped high-net-worth clients open shell companies in the Isle of Mann, sheltering their money from the CRA ‚ and ex-spouses ‚ and providing KPMG with 15% of the tax savings reaped by its clients. At least 26 bought in at the $5 million minimum investment.

Since May, an all-party House of Commons committee has been reviewing documents related to the scheme, including ‚Äúprivate and confidential‚Äù emails and script material for KPMG‚ sales reps. The latter document included a section about asset protection, explaining that “no eligible person should be considered to have an enforceable interest that could be subject to the claims of creditors, including spouses or ex-spouses under community of property type laws.”

One of the confidential emails reveals that KPMG had sought legal advice from an outside law firm. Part of the lawyer‚ reply included comments about the ‚Äúpossibility of avoiding the Divorce Act (Canada) and similar provincial legislation‚Äù through the scheme.

Controversy continues after confidential documents were leaked in March revealing that the CRA had offered a secret amnesty deal in 2015 to some of the 26 investors, freeing them from civil or criminal prosecution and fines or penalties in exchange for repayment of their taxes and interest on the unfiled investments.

Meanwhile, divorcing parties can draw on a number of legitimate means to safeguard‚ their interests and achieve equitable settlements. The lawyers at Peterson Stark Scott are ready to advise clients on how to properly navigate spousal obligations during divorce proceedings.

Leave a comment