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No time like the present to declare offshore income


As banking secrecy is eroded in formerly tight-lipped jurisdictions like Switzerland, there is no time like the present to come forward under the Canadian voluntary disclosure ("VD") program to declare previously unreported foreign income and avoid significant fines, penalties, interest and even potential criminal prosecution. Canada recently announced that it may take steps similar to those being taken in the United States to extract confidential foreign-based information on non-complaint taxpayers.

Recently, Canada's Minister of National Revenue ("Minister") publicly revealed that VDs filed under the Canada Revenue Agency's ("CRA") VD program have increased 50% compared to 2008 and are being filed in "record numbers". Less than 2% of the VDs filed with the CRA in 2009 concerned Canadians with UBS accounts. However, the Minister confirmed that Canadian authorities are in discussions with UBS to get information on Canadians with UBS accounts. The Minister further stated that if UBS is not forthcoming with the requested taxpayer information, Canadian authorities intend to use the courts to compel UBS to produce it.

Taxand's Take

Canadians who have unreported foreign-source income and foreign-based "secret" accounts need to understand that a key criterion for a valid VD is "voluntariness". If the CRA commences an audit or enforcement action against a taxpayer before the taxpayer commences a VD, any subsequently filed VD will be rejected. Therefore, taxpayers with concerns about any foreign-based income or accounts need to consider preparing and filing VDs before it is too late.

Read the full newsletter by Taxand Canada on why now is the best time to declare previously unreported offshore income.

Your Taxand contacts for further queries are:
Stevan Novoselac
T. +1 416 862 3630

John Sorensen
T. +1 416 369 7226

Taxand's Take Author