Tax Amnesty

Why you should report your  foreign income NOW before the Tax Amnesty window closes

Canadian residents are taxed on their worldwide income. This includes foreign income such as, business income, interest income, investment income, and foreign pension income, to name some categories.

If you are resident in Canada, you are supposed to report this income on your tax return in the year that you earned it. Many people don’t. A lot of Canadian residents have foreign income going back 5, 10, 20 years, or longer, and have never reported it. If you are one of those people, then you should disclose your unreported income now under the Voluntary Disclosure Program (“VDP”), before the Canada Revenue Agency (” CRA”) finds out about it and contacts you. And they will find out about it sooner or later.

If you disclose your unreported income under the VDP before they get to you, and you meet all of the conditions, then the CRA will waive the penalties and partial interest for the last 10 years. But if they contact you first, then they’ll assess you for the full whack of interest and penalties for all of the unreported years, and may even prosecute you criminally. The penalties and interest are pretty steep and can easily more than triple the original tax amount that you owed. For some people, this may mean losing your home.

 

But if I’ve gone this long without them finding out, how will CRA find out about me now , you ask? Good question. There area a number of ways. First, the Canadian Government has 92 treaties and 24 Tax Information Exchange Agreements (“TIEAs”) to enable the CRA to obtain information about Canadians’ offshore bank accounts and foreign assets. If you have a foreign bank account in a country that has a treaty or TIEA with Canada, then you may have already received a letter from your bank telling you that they are obliged to share your account information with the Canadian government. This should have been a warning to you that the landscape has changed.

The CRA also has an Offshore Tax Informant Program (“OTIP”), referred to by some people as the “snitch program”, which offers financial rewards to individuals who provide information on major international tax non-compliance cases.

The CRA also obtains information through data leaks such as the “Panama Papers” and the “Paradise Papers”.

The above measures are not an exhaustive list.

If you receive a letter from the CRA asking about your offshore income or bank account(s) then it’s too late to make a voluntary disclosure. In order to take advantage of the VDP program, you must disclose your offshore income before the CRA contacts you.

 

Check out my video below for more information.

  @normmacdonald01 #taxamesty #taxattorney #cra. #unreportedincome ♬ original sound - Norm MacDonald