Tax Tips

Canada-Swiss Information Exchange for Unreported Offshore Income

Posted: Tuesday, December 08th, 2015

Canada and Switzerland have entered into an agreement which will commence in 2018 for the automatic exchange of information. Swiss banks are already requiring Canadian clients to provide evidence that their Swiss offshore bank accounts have been reported in Canada on form T1135 and offshore income reported on a T1 tax return, or that a voluntary disclosure has been initiated. This is generally done by having a Canadian income tax lawyer confirm to the bank that a tax amnesty application for the foreign bank account has been submitted to the Canada Revenue Agency (CRA). Some Swiss banks have advised that they will liquidate Canadian owned bank accounts in early 2016, and mail a cheque to the Canadian client’s last known address if this confirmation has not been provided. If you have not previously done a voluntary disclosure for unreported offshore assets or unreported offshore income you should contact one of our top Toronto income tax lawyers to do so by December 31, 2015. If CRA audits you then you are no longer eligible to benefit from the voluntary disclosure program, which provides for no prosecution and no penalties and potential interest relief. If you receive a cheque and deposit it into your Canadian bank account, it will probably trigger a tax audit. CRA receives information from financial institutions on offshore transfers in excess of $10,000, and it audits offshore transactions. In some cases, the CRA has begun an audit very quickly, in some cases only weeks after the transfer was made.

Electronic Fund Transfer Reporting to CRA

Posted: Thursday, November 19th, 2015

As of January 2015, Canadian banks and other Canadian financial intermediaries have been required to report to the Canada Revenue Agency all international electronic funds transfers (EFTs) of $10,000 or more. CRA will be using EFT details to more effectively identify Canadian taxpayers who participate in aggressive tax avoidance and those who attempt to conceal income and assets offshore and evade their Canadian tax reporting requirements.

Another Detaxer Jailed

Posted: Wednesday, July 01st, 2015

Gerald Blerot, a detaxer who worked for the discredited Paradigm Education Group tax evasion organization, lost his appeal based on the so-called difference between a natural vs a legal person. His conviction of 43 months jail and a fine of $58,000 was upheld. Anyone who has failed to file tax returns because of a de-taxer scheme can avoid jail time and a fine by submitting a voluntary disclosure before being contacted by CRA.

Offshore Voluntary Disclosures Volume Up

Posted: Monday, June 15th, 2015

CRA, the Canadian tax authority, has released new figures indicating the number of voluntary disclosures (tax amnesty applications) for unreported offshore assets or income has doubled to 10,000 from the previous year. Canadians are becoming aware that offshore bank secrecy is over, and foreign banks are reporting to tax authorities. The new Overseas Tax Informant Program is also now fully operational and generated over 1000 calls to CRA. Canadian taxpayers with unreported foreign assets or undeclared income are eligible for the voluntary disclosure program if they approach CRA before the tax authorities contact them.

Increased CRA Focus on Cash Economy

Posted: Tuesday, May 12th, 2015

Canadian taxpayers who have unreported cash income can avoid prosecution and penalties by submitting a voluntary disclosure.Unreported cash transactions are going to face more audits and penalties owing to the federal budget of April 2015. This federal budget has allocated additional funds to CRA for increased compliance with respect to underground cash economy.

CRA Auditing Luxembourg Bank Account Holders

Posted: Wednesday, March 25th, 2015

CRA, the Canadian tax department, has started to audit holders of unreported offshore bank accounts in Luxembourg. They have the ability to charge Canadians who have not reported offshore income or assets with tax evasion. Any holder of unreported foreign assets or income should consider making a voluntary disclosure with the assistance of a Canadian tax lawyer in order to avoid prosecution and penalties.

Israel to Provide Banking Information to Foreign Governments

Posted: Wednesday, March 04th, 2015

The Israel Tax Authority director general stated that Israel won't be a tax haven for foreigners and said that the Israeli Tax Authority would provide information to foreign tax departments about funds held in Israeli bank accounts by foreign citizens or residents. Canadians with undisclosed Israeli bank accounts or offshore income can avoid penalties and possible prosecution by retaining a Canadian tax lawyer to submit a Canadian voluntary disclosure or tax amnesty application prior to any contact by the Canada Revenue Agency (CRA).

Unreported Income in HSBC Swiss bank Accounts

Posted: Tuesday, February 17th, 2015

In Early February of this year, the CBC’s investigative journalism team uncovered documents that showed English based bank HSBC actively aided hundreds of Canadian taxpayers hide secret accounts from the Canada Revenue Agency (“CRA”).  With the aid of HSBC, approximately 2000 Canadian taxpayers were able to avoid paying millions of dollars in taxes to the CRA.  A former employee of the bank came forward as a whistle-blower.  Of the almost 2000 taxpayers implicated in the HSBC leak, some two hundred and sixty have come forward and made voluntary disclosures to the Canada Revenue Agency.  Canadian taxpayers who have undeclared accounts and income and who have not been contacted by CRA should made an application under the CRA’s Voluntary Disclosures Program. 

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Deductibility of Costs Incurred in Submitting a Voluntary Disclosure

Posted: Tuesday, February 10th, 2015

CRA has confirmed its position that the costs incurred to make a voluntary disclosure are not deductible under paragraph 60(o) (which allows for the deduction of costs related to filing an Objection or Appeal) nor would they generally be incurred to earn income from a business or property. In cases of a  taxpayer who earns income from a business, the cost of filing a voluntary disclosure relating to that business may be deductible as a cost of representation pursuant to paragraph 20(1)(cc).

Offshore Tax Informant Program

Posted: Wednesday, February 04th, 2015

The Stop International Tax Evasion Program (SITEP) announced in the 2013 Canadian Federal Budget has been renamed the Offshore Tax Informant Program (“OTIP”). It is an income tax program aimed at catching Canadian taxpayers with unreported offshore income. The program commended on January 15th, 2014. A CRA committee will make a decision on the percentage that the informant receives based on the information provided and the details of the case. As tax lawyers we can assist Canadian taxpayers with unreported income to avoid tax prosecution and tax penalties by submitting a voluntary disclosure prior to contact from CRA. We can also assist informants with information about international tax evasion by Canadians who wish to make a claim under the OTIP.

Offshore tax haven crackdown extends to Israel

Posted: Wednesday, January 28th, 2015

International co-operation to deal with offshore tax evasion continues to grow. Swiss banks are now co-operating with the US IRS as a result of pressure from the US Department of Justice. Now Israel has announced that it will be providing information to foreign governments.

CRA Letter to Taxpayers re Offshore Asset Reporting & Voluntary Disclosure

Posted: Tuesday, January 27th, 2015

In December 2014, the Canada Revenue Agency (CRA) issued a letter to some Canadian taxpayers to remind them of the criteria for filing a T1135-Foreign Income Verification Statement and to review their income tax filings to ensure they have been properly reporting the relevant offshore assets and income. The T1135 was extensively revised as of 2013 and  is required to be filed by Canadians with offshore assets with a cost of at least $100,000. The CRA has advised income tax professionals that the receipt of this letter will not preclude the taxpayer from making a valid voluntary disclosure submission provided the taxpayer is not aware of any enforcement actions set to be conducted by the CRA or any other authority or administration with respect to the information being disclosed to the CRA.

OECD International Tax Exchange
– Bank Secrecy Over

Posted: Tuesday, January 06th, 2015

The era of bank secrecy for tax evaders is rapidly coming to an end. By 2018 Canada will join an agreement with 85 other countries as part of an initiative launched by the Organization of Economic Co-operation and Development (OECD). 51 countries will begin automatically swapping tax information collected by financial institutions in 2017, and 35 countries (including Canada) will join in 2018. Signatories included tax authorities from most European Union nations and traditional tax havens such as Liechtenstein, the British Virgin Islands, and the Cayman Islands. The information being exchanged includes account balances, interest payments, beneficial ownership, as well as a wide range of other information. Holders of offshore accounts will qualify for the Voluntary Disclosures Program that allows Canadian taxpayers to proactively deal with the problem of unreported assets or income. If the taxpayer comes forward and discloses complete information to the CRA before they are caught, there will be no prosecution for tax evasion, no penalties and they will generally be granted partial interest relief.

Reporting Offshore Pension Income

Posted: Wednesday, November 12th, 2014

Canadian residents are required to report their foreign pension income even if it is not taxable in the country where it originates such as the UK. If you have not reported your offshore pension income you may be eligible to have one of our Canadian income tax lawyers submit a voluntary disclosure to avoid penalties and prosecution and possibly reduce interest owing.

FAQ's

How much can I earn in Canada without paying tax?

In Canada, you can't earn without paying tax. You can lessen your tax for the past year to take advantage of any deductions and credits that the CRA is offering. For 2020 the personal exemption amount is up to $13,229.

How can I avoid paying taxes in Canada?

It's impossible to avoid paying taxes in Canada. Still, there are ways to reduce your taxes like contributing to retirement plans, planning the timing of income and business expenses, paying deductible expenses, and making contributions in high-income years, among others.

Disclaimer:

"These articles provide information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."