Auditor General

What’s hidden from the Auditor General ?

Vancouver Sun’s excellent business writer David Baines considers tax implications of government paying $6 million in legal fees for convicted criminals Basi & Virk.

$6-million question: Should corrupt aides pay tax for defence? David Baines, Vancouver Sun, June 23, 2012

“Is the $6 million in legal fees that taxpayers paid for the defence of provincial ministerial assistants David Basi and Bob Virk — who pleaded guilty to political corruption in the BC Rail case — a taxable benefit?

“Due to confidentiality rules, Canada Revenue Agency isn’t saying, but case law strongly suggests that it is.

“If it is, then Basi and Virk owe $2.6 million in taxes (assuming the benefit is taxable at the top marginal rate of 43.7 per cent). Of this amount, $880,000 would accrue to the province and the rest to the federal government…

“CRA interpretation bulletin (IT-99R5) states: “Where personal legal expenses of an employee (or of his or her family) are paid or reimbursed by the employer, the amount paid is a taxable benefit to the employee…”

Perhaps this issue explains why the BC Government is in court fighting the Auditor General’s effort to gain full access to documents in the Basi Virk files.

Anyone involved with lawyers in arrangements that move material sums from one party to another will know that income tax considerations are always a focal point. A lawyer reviewing financial agreements who failed to examine and warn the client of potential tax consequences worth millions would almost certainly be guilty of professional misconduct.

The lawyers representing Basi & Virk are among the province’s best so we can be certain that income tax liabilities formed a part of negotiations that resulted in guilty pleas in exchange for financial inducements and sentences with minimal impacts.

Was there a federal provincial agreement to waive tax liabilities? Was there an agreement for the province to cover tax liabilities that surface?

These questions are not likely to be answered until after Christy Clark and friends are sent packing.

12 replies »

  1. Campbell was the one who thieved and corruptly sold the BCR. All his ministers backed him to the hilt. Campbell thieved our entire BCR and the priceless Real Estate that went with it. that was his first election lie. The BCR wasn't for sale. Campbell is the s.o.b. that should be nailed.


  2. I never understood how those two could run up $6 Mill in lawyers fees… perhaps the lawyers should be up on charges too. Regardless, this tax angle is an interesting twist on a dark and dirty secret that hopefully will soon be uncovered.


  3. In January 2011, the special prosecutor costs were reported as $7.65 million and bills have continued piling up since then.

    As in most court cases, the real winners are the professionals who run the show.


  4. Yes, Christy and Co., will be sent packing, but they will be back. They will be spending a fair amount of time in public hearings, the courts and ultimatly, a jail cell.

    The criminal behavior of this government is truly astounding. Seems the more they try to cover up, the worst it gets. We need the CRA to have intervenor status, along with John van Dogen. Start lining the domino's up. Once they start falling, they will all come down. Sooner or later one of the “canary's will start to sing and the whole thing, will collapse on top of the BC Lberals.


  5. I would be willing to bet that the Lieberals are picking up the tax bill on this farce too. Wouldn't surprise me in the least.


  6. It is quite amazing how much effort, legal consideration, time, energy, and thoroughness went into formulating the deal with Virk and Basi in order to cover all the bases, make it air tight, and protect their interests. But I guess when your own ass is also at stake you put in extra attention and have more passion. If only the same diligence was extended to other deals (telus naming rights at BC Place and the RCMP extension come to mind) that look after the interest of all British Columbians, and not just convicted criminals and members of a corrupt government, we would all be better off.


  7. “These questions are not likely to be answered until after Christy Clark and friends are sent packing.” OR in jail!
    Its time to start pressuring your local NDP candidate to give an iron clad commitment that they will to go after all the politicians, legal beagle types and law enforcement officials involved in the sacking of BC.
    A completely neutral Ralph Nader type from out of province or country with the legal power to sit those with poor memories in jail until the fog clears would be my choice.
    It can be done.


  8. Gary T suggests that:

    “I would be willing to bet that the Lieberals are picking up the tax bill on this farce too. Wouldn't surprise me in the least.”

    The liberals didn't pick up the six million dollar tab, the taxpayers did and if the taxes are owing, it appears the taxpayers are on the hook for that. Actually it would be extremely appropriate if the BC Liberals did pay the six million and the costs for Wild Bill “seldom seen” Berardino and crew as well as all court costs as the entire kabuki exercise was performed to cover BC Liberal asses!

    I really think that almost any non-disclosure agreements that pertain to government activity should be almost never considered appropriate. Only in cases of truly privileged discussions or dealings with private business that would unfairly disclose proprietary information are such agreements even possibly legitimate and never to cover politician's asses for possibly criminal and/or unethical actions.


  9. I'm left wondering if the highly paid government lawyers are liable in any way for aiding and abetting a government that they absolutely know is engaging in hanky-panky, or are they “just doing their job”?

    I mean it definitely sounds as if there is criminal activity involved, and if the facts come to light eventually there will be some actors going to jail.


  10. Exactly. Non disclosure agreements, “involved” in the commission, of a criminal offence. Hmmm…lets see. I'd wager that would be construed as “obstruction of justice” by any lawyer.

    Patent manipulation of the public trust. One more “gift”, from your friendly neighbourhood BC Liberal Party.


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