Hey there, time traveller!
This article was published 3/7/2013 (1332 days ago), so information in it may no longer be current.
The practice of transferring money into offshore holdings to lessen its tax burden has thrust one prominent Winnipeg family unwillingly into the spotlight.
Documents leaked to the International Consortium of Investigative Journalists, and obtained by CBC News, indicate Graham Lount, a Winnipeg real estate developer and founder of Lount Corp., set up an offshore business in the British Virgin Islands and transferred millions of dollars between the two companies in the form of non-interest loans to help lighten the tax payout at the end of the year.
Lount was one of 500 Canadians named in the tax-haven leak.
Lount's low-tax, offshore concern was called Mebsuta Inc., a holding company that was incorporated in 1999. The entity is now listed as defunct and according to Colin Lount, Graham's son and the chief executive officer at Lount Corp., the family business hasn't had any offshore holdings in 10 years.
"There were certain funds that we were investing in, many of them out of Toronto, many described as hedge funds; it was high-risk and there were some great returns. Some of them couldn't be subscribed to from Canada, so you had to go offshore to get into the funds," Colin said Wednesday.
"But we always declared everything and there was never any issue with Revenue Canada. We don't have any offshore holdings anymore."
The reason Lount Corp. pulled out of the offshore game: money. The tax laws changed and the funds became less attractive, Colin said.
Thirteen years ago, the Graham C. Lount Family Foundation was formed, adding to questions regarding the financial manoeuvring of the Lount Corp. Lount's son wouldn't confirm if the registered charity, which focuses on at-risk youth groups, was started by his father partly for tax reasons, saying, "everything was done through proper channels" and the charitable arm has "never come under any issue legally."
The charity paid out approximately $500,000 in donations last year, to organizations such as the Boys and Girls Club, FortWhyte Alive and Marymound. It has also given one-time donations to groups such as the Assiniboine Park Conservancy ($350,000) and the Canadian Museum for Human Rights ($500,000), and has provided an annual bursary to the faculty of architecture at the University of Manitoba.
Dennis Howlett, executive director of Canadians for Tax Fairness (CTF), concedes while what the Lount Corp. has done with its offshore dealings in the past wasn't illegal, it does raise concerns about Canada's taxable grey area and the wealthy not paying their share.
It's not against the law to have an offshore account or holdings, Howlett said, but when the federal government is losing billions of potential tax dollars each year through the "aggressive tax planning" of the wealthiest 10 per cent of Canadians (CTF estimates a loss of anywhere from $7 billion to $20 billion annually), he wonders why Ottawa isn't doing more to close loopholes that provide access to offshore tax shelters.
"Part of the problem is the secrecy of these tax havens," he said. "In many cases, local law prevents the release of information about these holdings, so it's extremely difficult for (the Canada Revenue Agency) to get any details on these accounts.
"It comes down to the question: Why would you go to the bother of opening one of these accounts if it wasn't to avoid paying income tax? Cases like this are very frustrating for middle-income Canadians who eventually feel the pinch down the road through service and program cuts."