Financial news and advice — October 2014

George Michael and Michael Caine are just two among a group of wealthy Brits who are under fire for tax avoidance. Plus, new studies reveal that most university students hide their debt level from their parents, that most rich Canadians carry a mortgage, and more.

MICHAEL REVELATIONS

Celebs caught in UK tax avoidance kerfuffle

Actor Michael Caine and musician George Michael are among more than 1,600 wealthy UK doctors, lawyers, business executives and celebrities under fire for trying to shelter £1.2 billion ($2.1 billion) in a Leeds-based tax shelter called Liberty. While legal — the scheme involves large artificial losses offshore that are used to avoid taxes on other income — UK tax authorities have been investigating Liberty’s practices for a decade and will be challenging the scheme in court next March. If it’s rejected, investors will be forced to pay back hundreds of millions of pounds in taxes. Michael, 51, worth an estimated £105 million, allegedly sheltered £6.2 million in earnings, while Caine, 81, reportedly tried to shelter £600,000.

HIDDEN EXPENSES

Students confound parents with secret spending

Canadians who have children in college or university may think they know the state of their child’s finances, but, according to an RBC poll, they don’t necessarily have all the facts. Nine in 10 parents surveyed say they have a rough idea of their kids’ debt level. A majority (55%) of post-secondary students polled, however, reveal they sometimes hide the amount of money they spend so they won’t have to justify their purchasing behaviour to their parents.

SWEETEN THE SQUEAL

Reward for tax tattlers prompts canary calls

Canada Revenue Agency’s new snitch line — set up earlier this year for citizen informers to tattle on taxpayers who may be hiding money offshore — received 800 calls within just a few months, the National Post reported. Of those calls, 100 went to the next level, with the tipsters identifying themselves and providing detailed information in writing as to the alleged tax evasion. The CRA is now following up on 80 of those written files; 20 proved to be dead ends. The program offers tipsters a cash reward of up to 15% of any taxes eventually recovered.

NO INHERITANCES

Don’t get your hopes up

Fewer than half (45%) of Canadians are expecting an inheritance — monetary or otherwise — from their parents, according to an Ipsos Reid poll conducted on behalf of HomEquity Bank. Just one in three (35%) respondents believe they will receive an inheritance, while one in five (20%) don’t know.

HOUSE RICH

Moneyed mortgages

Think the rich are debt-free? Think again. One-fifth of high net worth Canadians (those with investable assets of $500,000 or more) carry a mortgage, with an average size of $156,890, according to an Investor Group survey. Two-thirds (67%) of the mortgage holders indicate they have the cash available to pay for their home in full and 27% plan to retire with a mortgage.

About the Author

Tamar Satov


Tamar Satov is managing editor of CPA Magazine.

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