Credit Suisse and Canada Face Off in Tax Info Fight

November 23, 2010 Tax HavensTaxation in Canada

Old Bank Vault - 007The international bank Credit Suisse is set to fight a Canadian federal court order issued in October which mandated that an extensive amount of customer data be handed to Canadian national tax authorities to aid investigations into offshore tax evasion.

Late last week it was revealed that on November 17th lawyers representing Credit Suisse filed an application with the Federal Court of Canada to overturn a previous ruling which granted tax authorities access to over “500 boxes” of archived transaction data and customer details. The bank’s legal department now claims that the original court order was “inordinately broad,” and tax authorities should only be granted access to information on clients they specifically suspect of having committed tax evasion. Further, investigators should also validate any of their requests with evidence of illicit actions committed by the bank’s customers.

In October 2010 the Canadian Revenue Agency (CRA) obtained an “unnamed person requirement” against Credit Suisse, meaning that the bank would be required to handover customer details and transaction histories even if investigators were not able to identify them by name. The decision applied to all archived data held by the bank, which ceased its operations in Canada in 1998. The CRA’s original court order was granted based on evidence from an anonymous informant, known as “Taxpayer X”, who claimed that Credit Suisse actively aided him in avoiding his tax obligations. The CRA had hoped that the information would aid investigators in discovering methods by which some Canadian taxpayers hide their money in taxhavens, or if any other national bank was is involved in the process.

The bank is now contesting that the evidence provided against it was not significant or extensive enough to mandate an “unnamed person requirement”. The CRA has until November 27th to respond to Credit Suisse’s appeal. Ultimately, the upcoming decision regarding Credit Suisse’s application could have far-reaching effects on the ability of the CRA to conduct further investigations into offshore tax evasion.

Photo by JasonBechtel