Retiring CRA boss leaves KPMG tax-dodge scandal for successor to deal with

The head of the Canada Revenue Agency, who staunchly defended CRA's handling of the KPMG offshore scandal including itssecret "no penalties" offer to wealthy tax dodgers, is stepping down Friday.

Commissioner Andrew Treusch, who was appointed in December 2012, quietly announced his retirement to CRA employees last month as the Commons finance committee was investigating his agency's secret deal with wealthy KPMG clients.

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In an email sent to CRA employees, obtained by CBC News, Treusch said he's "very proud" of the agency's accomplishments since he took the top seat.

"When I arrived, I committed to improving service, strengthening compliance, and upholding the integrity of the agency. I know that we have made good progress in all of these areas," he wrote.

Thecontroversial Isle of Man tax-avoidance schemeinvolved the creation of shell companies based on the smallEuropean island between Ireland and England.KPMG ran the operation for high-net-worth clients for more than a decade before it was eventually detected by CRA auditors in 2012.

The agency would later allege it was a "sham" "intended to deceive" authorities.

Despite those allegations, CRA mysteriously let the case fall dormant after obtaininga judge's order to force the accounting firm to hand over the names of itsclients.

Last year, lawyers for CRA and KPMG admitted they had been having out-of-court discussions. It was later revealed CRA had made a secret amnesty offer to KPMG's Isle of Man clients, a "no penalties" deal that required them to pay the back taxes owing and some modest interest.

Treusch and his officials have been under scrutiny for months since the secret deal was leaked to CBC News in a brown envelope.

• Doc Cloud: AMNESTY OFFER LETTER

CRA'soffer in May 2015 was accepted by most of the KPMG clients using the tax dodge, but it was the CRA itself that demanded the public be kept in the dark.

MPs wanted to know why CRA made the secret offer to KPMG and its clients despite pursuing themin court.

In his testimony before the Commons finance committee, Treusch said he could not speak to specifics about CRA's handling of the KPMG file, nor could he confirm that the leaked letter was even legitimate.

"The CRA is in the difficult position of being unable to fully discuss details of the KPMG file due to ongoing litigation and our confidentiality provisions," he told the committee.

Treusch did say an "independent review" found CRA "acted appropriately" in its handling of the KPMG file.

Treusch didn't reply directly to recent CBC queries about his retirement. In an email to CBC News, CRA mediarelations quoted from the Dalhousie tax professor's review. "The actions taken by CRA employees in relation to the KPMG file were in accordance with the CRA's Code of Integrity and Professional Conduct."

CRA says it will not release the report itself because of ongoinglitigation, and suggested to CBC News journalists use the access toinformation act to obtain the study.

Treusch has also previously said he had no active involvement in the KPMG case.

"I note in the strongest possible terms that, as the commissioner of the Canada Revenue Agency, I have never provided direction to CRA officials on the approach to be taken in the management of KPMG litigation or negotiations."

Treusch said he decided to retire in June to allow for a proper transition following the election of the Liberal government.

"As a new member of Parliament and minister, I am grateful for his dedication and support to me through this period of transition," Revenue Minister Diane Lebouthillier wrote CBC News.

NDP finance critic Guy Caron says all eyes will be on the Liberal government as it chooses a new commissioner to lead CRA.

"It's a very delicate time for CRA," Caron said. "The position will come under a lot of scrutiny with what's going on right now."

Neither the minister's office nor CRA has said who will replace Treusch.

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