The tax authorities can continue their international verification of Lucien Rémillard

It is not always easy for the Canada Revenue Agency (CRA) to check the file of a wealthy taxpayer who moves to a tax haven.

Posted at 5:00 a.m.

Vincent Brousseau-Pouliot

Vincent Brousseau-Pouliot
The Press

However, the federal tax authorities have just won a victory in the Federal Court that will allow them to continue their international audit of Quebec businessman Lucien Rémillard, a resident of Barbados, a tax haven, since 2013.

Mr. Remillard is asking the federal courts to quash the CRA’s tax inquiries about him in the United States, Switzerland and Barbados. He lost his case at first instance, but intends to appeal to the Federal Court of Appeal.

This decision handed down last week by the Federal Court is important for the CRA, which will be able to continue to contact the tax authorities of other countries for verification. For several years, the G20 countries – including Canada – have been trying to improve the exchange of tax information.

An “undomiciled resident” of Barbados

Lucien Rémillard made his fortune in waste management and once owned the famous St-James Hotel in Old Montreal. When he sold his RCI Environnement business to Waste Management for around 300 million and retired in 2013, he moved to Barbados. In 2015, he also sold the St-James for 24 million.

The CRA doubts that Lucien Rémillard has truly resided in Barbados – where he has no domicile – since 2013. Since 2016, the tax authorities have been verifying his tax residence.

The tax authorities first made several requests for detailed information from Mr. Rémillard. The latter responded in particular, through the accounting firm KPMG, to be “resident, but not domiciled in Barbados for the years 2013-17”. The tax authorities then asked him “to explain what a non-domiciled resident of Barbados is”, writes the Federal Court.

According to tax information (as summarized by the Federal Court), the retired businessman would spend about a third of the year in Barbados, another third in Quebec and the last third in the United States.

If the tax authorities determine that his tax residence is in Canada, Mr. Rémillard will have to pay taxes in Canada on all of his worldwide income, including on his investment income.

As part of its verification, the CRA found several links between Mr. Rémillard and Canada since 2013, as appears from the facts reported in the decision:

  • he has ties to several companies and trusts in Canada;
  • he does not have a domicile in Barbados and he uses as his address in Barbados “the address of his financial adviser or that of a luxury residence for short-term rental”;
  • he would spend a third of his time in Canada;
  • he donated his residence in Quebec to one of his sons;
  • he uses, when he is in Canada, the principal or secondary residences of his sons;
  • the rest of his family resides in Canada.

Not a “fishing trip”

In 2019, “dissatisfied with the information received” from Mr. Rémillard, the federal tax authorities requested information about him from the tax authorities of the United States, Switzerland and Barbados, under Canada’s tax treaties with these countries.

In July 2019, Mr. Rémillard applied to the Federal Court to have these requests for information from foreign tax authorities quashed. He considered that they constituted a “fishing party” prohibited by law and that they contained “misleading declarations”.

The CRA cannot unreasonably request any taxpayer information from a foreign tax authority. The law forbids it. But in Mr. Rémillard’s case, the Federal Court concludes that the requests to foreign tax authorities are “justified”, that they respect Canada’s tax treaties and that the tax authorities have not committed any irregularity justifying the intervention of the courts. federal.

Mr. Rémillard intends to appeal this decision to “protect his rights with regard to this tax audit which has been going on for far too long,” his lawyers said in a written statement to The Press.

On the merits, the CRA has not yet determined whether Mr. Rémillard was a tax resident of Canada or Barbados for the years 2013 to 2017 (or at least, this information is not part of the public record).

Mr. Rémillard “maintains that there is no basis to conclude that he has been a Canadian resident since he retired to Barbados in 2013 and paid Canadian taxes arising from his emigration,” his lawyers said. . Mr. Rémillard specifies that he is not currently subject to a notice of tax assessment.

The CRA did not respond to our questions on Monday.

Confidentiality and in camera

Another complicating aspect of this dispute: the retired businessman wanted all of the evidence submitted by the CRA in support of his claim to remain confidential.

The Federal Court and then the Federal Court of Appeal concluded that under the open court principle, evidence filed in litigation is presumed to be of a public nature. Mr. Rémillard could not request total confidentiality of the 3,674 pages of evidence filed, although he could request confidentiality for certain information pertaining to his private life. Mr. Rémillard is evaluating the possibility of appealing to the Supreme Court on this issue.

In parallel with this request for total confidentiality, he made a second request for confidentiality, this time for some of his financial information and information concerning “third parties not involved in the litigation”. While the case continues in the Federal Court of Appeal, a confidentiality order covering this information is in effect.

Because of these requests, the Federal Court stated in its decision that it “had no choice but to conduct the hearing [du dossier] […] behind closed doors”.

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