He describes himself as a fund manager for the ultra-rich, with a penchant for expensive champagne and personal wealth in the eight figures.
But Charles Shaker also has a penchant for not paying 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 certain types of assets, it’s proving difficult for the CRA to do anything about it.
Shaker, an Anglo-Canadian financial adviser, made tabloid securities in 2013, when he ordered a $500,000 bubbly round of choice for revelers at a Formula 1 night in Monaco. The incident was later featured on a CNBC show called The Rich Rich’s Guide.
What news reports failed to reveal was that around the same time, Ottawa listeners were poring over his finances — largely because his name was on a 130,000-person whistleblower list. and entities linked to confidential accounts of the private bank of HSBC in Geneva.
Shaker already had a relatively modest balance of $32,797 at that time, according to court records. But after CRA accountants reviewed his case, they issued the multi-millionaire an updated tax bill for the hefty sum of $3.8 million in 2017.
Five years later, Shaker – who moved from the Ottawa area to England in 2009 and took up residence in Monaco around 2015 – has failed to pay, according to the CRA in court filings. With interest, his bill now stands at more than $4.8 million.
He says this is the first time he has heard of it and he will dispute the amount.
“The CRA has not been in contact with me since the creation of the alleged reassessments giving rise to the alleged tax debt,” the 42-year-old said in a sworn statement filed in court.
“The CRA has repeatedly made errors in sending correspondence over a number of years.”
ARC fails to recover proceeds from penthouse
The dispute is being played out in Federal Court.
In early November, the government filed a motion to force Shaker’s former lawyer, Chadwick Boyd of Ottawa, to provide information about a luxury downtown Toronto penthouse that bore the name of Boyd, Shaker and another man on the land title.
If Shaker actually owned part of the condo, the CRA could sue her to collect her tax debt.
Weeks after the CRA attempted, so far unsuccessfully, to obtain Boyd’s records, the penthouse and another in downtown Toronto went on the market. They both sold out around New Years – one cost $2.5 million, the other $1.8 million – and closed two weeks ago.
The CRA went to court again, this time seeking a cut of the sale proceeds, arguing that Shaker had an interest in both properties that could be used for his alleged $4.8 million in debt. tax.
But the government ran into a problem – the penthouses were held in trust, an arrangement in which one or more people hold legal ownership of an asset, but only for the benefit of others. One of the condos was owned by Shaker, Boyd and another man for the “Richie Rich Holdings Trust”, the other for an entity called “Vinyl Spin Investment Trust”.
Court records show that the CRA had tried to obtain information about the trusts and the identity of the true beneficiaries from Shaker and others since at least 2015, to no avail. Without that information, the agency couldn’t prove Shaker was a beneficiary, and he himself said in an affidavit that he had no “personal interest” in either. property. A judge therefore refused to allow the CRA to touch the proceeds.
“Mr. Shaker is a judgment debtor in his personal capacity and not in his capacity as trustee of the RRH Trust,” Federal Court Judge Elizabeth Walker said March 24. the debt in question is the trustee’s personal debt. »
Ironically, she ordered the government to pay Shaker $12,000 for his legal costs.
Pandora Papers Leak Reveals $4 Million London Apartment
The Federal Treasury will now have to look elsewhere for the assets it can seize. But it could prove even tougher than the government’s doomed attempt to crack down on Toronto condos.
Records of a number of tax haven financial data leaks, shared with CBC News through its collaboration with the Washington-based International Consortium of Investigative Journalists, show that Shaker owned or was a director of several offshore companies in the British Virgin Islands. and Barbados.
He is in the Pandora Papers leak from last fall, where CBC News found his name on a BVI company called Branstead Ltd.
Officially, this company has other people ostensibly serving as “nominees”, or replacements who sign their names on paper as directors and shareholders – as fronts for the true owner, essentially. The sole shareholder, on paper, is another company called Monet Investment Ltd., with an address in Seychelles, according to Pandora Papers records.
But one of the leaked documents is a 2017 form from an offshore service provider called Trident Trust, stating that Shaker is the “beneficial” or beneficial owner of Branstead Ltd. The declared activity of the company is “property holding”.
It is legal in most jurisdictions, including Canada, to use named directors and shareholders, but it is often a tactic – especially in tax havens – to hide the people who actually control a company and its assets.
Branstead Ltd., in turn, owns a penthouse apartment in London’s Canary Wharf area that was bought in 2010 for the equivalent of $4 million, according to UK property records.
The CRA told CBC News that in general it could potentially use terms in Canada’s tax treaty with Great Britain to attempt to collect a tax debt from a person living in England.
Without access to the leaked Pandora Papers, however, the ARC would almost certainly be unable to link Shaker to the multimillion-dollar London apartment.
This is because Britain, like most of Canada, does not register the identity of the beneficial owners of property – the true owners behind the layers of companies or trusts – in its land registry. And the British Virgin Islands, like most countries around the world, does not require companies to disclose who their beneficial shareholders are.
“[The CRA’s] hands are tied because they just don’t have the tools to track these assets around the world,” said Kevin Comeau, attorney and corporate transparency expert.
Public records would help CRA, lawyer says
Comeau, alongside numerous transparency groups, has been advocating for years for Canadian countries and provinces to adopt beneficial ownership registries that publicly record who truly owns land and significant stakes in private companies.
Not only would this help combat money laundering, potentially exposing where criminals or their known associates store ill-gotten gains, but in the tax arena it could give revenue agencies like the CRA “much more information and an ability to trace those funds” from people who may not be paying their fair share, he said.
British Columbia is the only jurisdiction in Canada to have a beneficial ownership registry for property, set up following discoveries of significant money laundering in the province’s real estate sector.
Meanwhile, the federal government has pledged to have one in place for businesses by the end of 2023, as part of the deal between the minority Liberals and the NDP.
Shaker ‘denies any allegation or involvement’
The CRA would not comment on its legal row with financial adviser Shaker, citing strict rules of taxpayer confidentiality.
But he said that in general, initiatives to promote transparency are “a positive step” to help enforce tax laws.
“Having access to information about the beneficial owners, beneficiaries, directing minds or related parties of an entity or asset enables tax administrations around the world to tighten the net on high net worth individuals, corporations and entities attempting to avoid paying their fair share of taxes,” the CRA said in a statement.
CBC News sent a list of questions and preliminary research findings to Shaker and his lawyers – among them, that his offshore company Branstead Ltd. appears to use named directors and shareholders, and that this would tend to frustrate the CRA’s ability to collect any tax debt it owes.
They didn’t respond to specific questions, but one of those attorneys gave a general response last week that Shaker “denies any allegations or involvements on your list of questions” and that “he will continue to legally establish his case before the courts.
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