KPMG wants CRA affidavit in tax 'sham' case struck from public record

In a court hearing last April, a judge agreed to restrict public access to documents in a $37-million tax "sham" case.

KPMG Law requested the temporary sealing order in the case regarding its client Gold Line Telemanagement, which the Canada Revenue Agency alleges was involved in a "carousel scheme."

Now, The Fifth Estate has learned that KPMG has applied to the court to have the affidavit at issue struck from the record completely — preventing the public from ever knowing what was in that CRA document and accompanying exhibits filed with the court last February by the Department of Justice.

While the contents of those documents are so far unknown to the public, they could provide key information regarding how an alleged $37-million tax scheme was perpetrated against the Canadian Treasury.

A media lawyer hired by CBC, Iain MacKinnon, has been granted standing to argue against KPMG's motion to strike in a court hearing scheduled for January 2024.

There can be legitimate reasons for a court to remove or seal documents in court cases. For example, courts may move to protect sensitive commercial information not relevant to the public interest.

Still, MacKinnon says Canadians have a constitutional right to access court proceedings and that motions to strike and sealing orders should be an exception.

"There's allegations that there are tens of millions of taxpayer dollars at issue," MacKinnon said. "All the evidence that is before the court should be accessible to reporters and the public."

Founded in 1991, Gold Line Telemanagement is a Canadian telecommunications company that says it researches, develops and markets telecommunications products.

Gold Line declined to answer questions from The Fifth Estate, stating the case was before the courts.

A carousel scheme refers to a group of companies working together to set up fake business transactions in order to generate illegitimate GST or HST tax refunds — when no tax was ever paid in the first place.

In a statement, the CRA said it has identified at least $1.1 billion related to carousel schemes in Canada since 2017.

The Fifth Estate reported last week on another alleged carousel scheme in Canada involving a company called Iris Technologies. In that case the CRA released $63 million in tax refunds that it is now seeking to recoup, stating they were "illegitimate."

Iris and Gold Line have both denied the allegations and appealed the CRA's reassessment to the Tax Court of Canada.