New trust fund rules meant to crack down on tax evasion
(The Star Canada)

The federal government has introduced sweeping reporting rules for private trust funds, which have been abused for decades by some wealthy Canadians to hide money from tax collectors.Only months after the Star and CBC revealed an offshore trust fund worth $60 million (U.S.) linked to two generations of Liberal Party fundraisers in the Paradise Papers leak, Ottawa added the trust rules into the 2018 budget to force the people behind trust funds — those who contribute or receive payments as well as the lawyers and accountants who manage them — to identify themselves in tax filings.Tough penalties will force those who don’t file to consider the consequences of staying in the shadows. Those who fail to file a tax return for their trust will face fines equalling 5 per cent of its total value.“Trusts are a great vehicle to obscure who owns what,” said Mora Johnson, an anti-corruption lawyer and former Global Affairs Canada official. “They are easily abused for money laundering because ultimately they’re a way to hold and move assets, with money changing hands, that can be incredibly opaque.“As soon as you have more information available about trusts, you remove anonymity and put names to assets. This opens up opportunities for law enforcement to identify who is evading taxes.”The Canadian government still has no comprehensive list of trust funds that have been set up in Canada or are used by Canadians because there is no requirement to register them. Trusts only have to reveal they exist when they voluntarily file a tax return to the Canada Revenue Agency. Many of them do, but it’s a system that relies on people to self-report.The rules weren’t among the policies touted by the government in February when the budget was released. Instead, the trust rules were buried in a 78-page supplementary information booklet on tax measures.But they have caused a stir in the tax industry that designs financial struct ...