Carney’s Brookfield has presented a “masterclass in tax avoidance”

A Parliamentary committee was told that Prime Minister Mark Carney’s former company, Brookfield, has been busy perfecting a “masterclass in tax avoidance.”

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A Parliamentary committee was told that Prime Minister Mark Carney’s former company, Brookfield, has been busy perfecting a “masterclass in tax avoidance.”

During a Standing Committee Meeting on Use of Offshore Tax Havens, D.T. Cochrane, a senior economist at the Canadian Labour Congress, testified that Brookfield Asset Management has engaged in exceptional forms of “creative accounting.” Mark Carney served as vice-chair at Brookfield before entering politics.

“Brookfield has really been a masterclass in this tax avoidance when you look at what their effective tax rate is versus what you’d expect them to pay based on the combined provincial and federal income tax rate,” Cochrane told the committee on Monday.

“We know, for example, that Brookfield has dozens of subsidiaries in Bermuda,” said Cochrane. “How much revenue or profit is Brookfield claiming in Bermuda? Because that would be a huge red flag if they’re claiming large amounts of revenue there given the size of Bermuda’s economy.”

While Cochrane noted a “distinction between tax evasion and tax avoidance,” Brookfield has greatly benefited from blurring those lines.

“I would say that there is a gradient from corporations using a tax avoidance mechanism like research and development tax credits that are being used exactly as intended. Then there is a gradient towards evasion where you get the use of the tax of our tax rules that abides by the letter of the law but violates the spirit of the law,” he said.

“I would suggest that Brookfield is a master of making use of our tax system in ways that range from perfectly legitimate to all the way to seriously questionable.”

Conservative MP Eric Lefebvre questioned if Carney was “laughing at Canadians” when he claimed Brookfield’s Bermuda holdings ensured the corporation paid its fair share in Canada.

“The prime minister tried to defend the use of tax havens by Brookfield, which he used to head Carney up, by saying that this is a method of having taxes paid here in Canada. Isn’t that laughing at Canadians, who every week have to pay their taxes?”

Cochrane said based on the information he has on Brookfield’s tax and corporate structure, it has only raised “questions upon questions” and “concerns.”

“The last I looked, Brookfield’s effective tax rate was somewhere below 10 per cent, versus what you would expect, over 26 per cent for the corporate income tax rate,” he added. “They’re lowering their bill through a whole range of methods.”

For Carney to “suggest that the corporation lowering its tax bill is done to help Canadians? Yeah, I would agree that that’s pretty laughable,” said Cochrane.

“It’s quite duplicitous about what a corporation exists for and what the benefit is to the rest of us,” he added, noting that it was “safe to say” Brookfield has made off with billions in revenue that could have been collected and done a lot of good.

Brookfield was labelled the largest “tax dodger” among Canadian corporations last week, according to expert testimony at a recent Standing Committee on Access-to-Information, Privacy and Ethics.

Brookfield was cited among the top Canadian corporations for having a colossal tax gap, worth more than $6.5 billion between 2017 and 2021.

The Canada Revenue Agency refers to a tax gap as “the difference between the taxes that would be paid if all obligations were fully met in all instances, and taxes that are actually paid and collected.”

Bloc Québécois MP Sebastian Lemire also noted during Monday’s meeting that the Carney government decided not to implement a “minimal 15 per cent tax,” which would bring Canada in line with the global average.

The initiative was from the Organisation for Economic Co-operation and Development and G20 countries.

Additionally, the prime minister has hinted that his upcoming federal budget may usher in new measures to create “a highly competitive corporate tax system.”

“We’re well aware of what the relative tax rates are in investment, and we will make sure that they are competitive in the budget,” Carney told reporters last month.