Do these people look familiar to you?
YES! They are the rich and famous and you probably read about them on the news everyday.
But recently, they are ALL OVER THE HEADLINE NEWS because they are named in the Paradise Papers.
Paradise Papers are the cache of 13.4 million confidential electronic documents relating to offshore investment that was leaked to German newspaper Süddeutsche Zeitung. The Papers were then shared with the International Consortium of Investigative Journalists and a network of 382 journalists in 67 countries. The documents originated from the offshore law firm Appleby and contained the names of more than 120,000 people and companies. It is suspected that the people and companies named in the Paradise Papers are “docking” trillion of dollars in tax havens such as Bermuda, Cayman Islands and Isle of Man in order to avoid paying taxes.
Let’s look at some examples:
- Two of Justin Trudeau’s party fundraisers, Leo Kolber and Stephen Bronfman, are linked together in a Cayman Islands trust fund that kept $60 million U.S. Through a lawyer, Kolber and Bronfman said they always acted “properly and ethically, including fully complying with all applicable laws.”
- Lewis Hamilton, a four-time Formula One race champion, avoided pay $5.2 million U.S. of VAT, a consumption tax charged in Europe on everything from socks to cars, when he purchased his private jet for $27 million U.S. in 2012 by purchasing the jet via Lewis Hamilton’s company in the Caribbeans and then the jet is leased to a company that is owned by Lewis Hamilton in the Isle of Man.
- Queen Elizabeth II holds investments via funds in the Cayman Islands that have put money into an array of businesses, including the off-licence chain Threshers, and the retailer BrightHouse, which has been criticized for exploiting thousands of poor families and vulnerable people.
- There are financial ties between Russian President Vladimir Putin’s family and one of U.S. President Donald Trump’s closest advisers, Secretary of Commerce Wilbur Ross. Ross has a stake in a shipping company that received more than $68 million (U.S.) from a Russian energy company co-owned by Putin’s son-in-law. Ross had mentioned he had cut ties with companies that could hurt his role in the government.
These are just four of the millions of people involved in investing in the tax haven. According to the Toronto Star, the top ten countries that Appleby clients are connected to are below:
So are these people and companies right? Did they commit any crime? Are everything ethical of what they are doing?
Well! For an average person like me, there are ways available for Canadians to save their tax bill. Here are some examples:
- Anyone who are eighteen and older can contribute their money to a Tax-Free Savings Account (TFSA). Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.
- People who are employed can contribute parts of their income into a Registered Retirement Savings Plan (RRSP) to lower their income tax of that taxable year. No income earned in the account is taxed including interest, dividends, capital gains, and foreign exchange gains until you withdrawn the fund.
Anyone can borrow money to invest in GICs, bonds, and mortgages, and the interest expense becomes tax deductible. You can also use the borrowed funds to buy dividend stocks and deduct the interest expense.
So you see,
ANYBODY CAN HAVE THEIR TAX BILLS CUT!
If you are a business owner, or if you are a professional who holds a lot of investments, you would hire an accountant and a lawyer to make sure you do not have to pay as much taxes as you think.
Therefore, I think…
IT IS PERFECTLY NORMAL for the ultra-rich, and powerful people to hire Appleby to guide them how to save their tax bills.
People who are hiding their money in tax havens for tax evasion, money laundering or illicit dealings should be caught.
So this is my two-cents on what I think about this Paradise Papers leak. I think this news is making the stock and crytocurrency market shaky now.
So do you think people mentioned in the Paradise Papers pay back their taxes owed? Do you think you would do the same thing if you are just as rich as the ultra-rich? Please leave you comments below! Catch you on the flip side!