The End of Secrecy – Global Transparency to Change Business Taxation
In old movies, even some not so old ones, secrecy in banking and money transfers reflected a reality. This reality has been under attack, at least starting with the Organization for Economic Cooperation and Development’s project on Unfair Tax Competition in the early 1990’s, and more recently with its Tax Evasion Initiatives. The Canadian Government has been aggressively targeting off-shore tax cheats since 2013. Now, more than ever, secrecy is at an end and promises of off-shore tax protections are a myth.
The first way that the CRA will find out about your off-shore assets is through other governments. Now, foreign financial institutions and foreign governments will no longer refuse to disclose your foreign assets and income to the Canada Revenue Agency. In fact, some governments and financial institutions will pro-actively disclose information of Canadian citizens or residents without even being asked. The CRA has stated that it will use this information to go after tax cheats and prosecute them to the maximum extent permitted by law.
The second way that the CRA will find out about your tax-dodging activities is from your friends, family, acquaintances, business associates, or others who know of your activities. In fact, since the CRA started its Off-shore tax evasion tip-line, more than 398 written tips have been received and over 20 persons have signed contracts with the CRA for providing information. They do this because they get a cut of the taxes collected. That is right, by reporting you to the CRA, others will make money – a very strong incentive and means of revenge (in some cases). Overall, the CRA reports, over $155 Million in federal and provincial taxes and penalties have been assessed using this program, and criminal charges are being investigated.
A third, very public way, is through document leaks. These leaks include the Lichtenstein List and the Panama Papers. These document leaks point out the financial dealings of Canadians and will result in them facing the full wrath of the CRA.
Canadian taxpayer who don’t come clean, perhaps through the Voluntary Disclosure Program, are playing with fire and face very unpleasant realities. There are a lot of myths out there and many programs being sold by snake-oil salesmen that promise Canadians lower taxes through off-shore schemes. If it is too good to be true, it is. Tens-of-thousands of Canadians are taken in by these fraudsters, and it is the taxpayer, not the fraudster, that ends up paying the piper and losing their life savings.
Faris CPA has helped many of its clients come clean about their international income and assets. This way, they avoid costly audits and litigation and don’t have to pay the penalties and some of the interest associated with their tax evasion. And, it’s not just money you save, you also save yourself from the possibility of time behind bars.
NOTE: Articles are for general information only and do not constitute tax advice nor can they be relied upon.