Canadians using offshore tax amnesty to name advisers

Added 21st December 2016

Canadian taxpayers wanting to use voluntary disclosure programmes (VDP) should have to identify advisers who helped them avoid paying tax, the Canada Revenue Agency’s (CRA) Offshore Compliance Advisory Committee has recommended.

Canadians using offshore tax amnesty to name advisers

The committee, which was set up in April, said: “The CRA has confirmed that there exists no requirement to disclose the identity of advisers who assisted with non-compliance (by, for example, helping taxpayers set up offshore accounts or structures).

“Such disclosures provide valuable information that could materially assist the CRA in identifying advisers that promote and enable offshore non-compliance. These advisers may be liable to third-party penalties or may be guilty of the offence of conspiring to enable tax evasion.

“The committee believes that any person making a voluntary disclosure should be required to provide this information.”

This was one of the recommendations made by the committee in early December to minister of national revenue, Diane Lebouthillier.

She said: “Our government has made it a priority to make the tax system fairer for midde class Canadians and to crack down on those who cheat and who do not pay their share.

“That is why we created the Offshore Compliance Advisory Committee – to advise us on the best ways to improve our tax system. We will continue with our efforts to crack down on tax cheats. My message is clear: the trap is closing.”

Other recommendations

In addition to naming advisers, the committee made several other suggestions to the CRA for clamping down on tax avoidance.

The committee recommended that relief from penalties and interest charges could be seen as overly generous. They should be reduced if, among other things, there was:

  • deliberate or wilful default or carelessness amounting to gross negligence;
  • active efforts to avoid detection through the use of offshore vehicles or other means;
  • large dollar amounts of tax avoided;
  • multiple years of non-compliance; or,
  • repeated use of the voluntary disclosure programme by a taxpayer who meets clarified requirements for repeated use.

Further, where no legitimate reasons exist for a taxpayer’s failure to provide full and complete information (such as inheriting an offshore account from a deceased relative who did not keep adequate records), the CRA should insist on receiving the necessary and relevant information.

Taxpayers who are unwilling to do so should be denied the full benefits of the VDP.

Lebouthillier advised that she and the CRA will leverage the committee’s recommendations to review the parameters of the voluntary disclosure programme. 

Changes will be communicated in late 2017. 

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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