Are you a wealthy Canadian with bulks of cash stashed in foreign banks? Since the Canada Revenue Agency circulated its Liechtenstein lists with the names of local people who owned unreported foreign property and income, in 2007, many people got scared and came forward. The number of voluntary disclosures has gone up dramatically ever since. The agency collected over four thousand disclosures in 2011/2012 tax year, which was more than twice the revenues it collected in 2007.
Today unreported foreign property and income disclosures are closer to one third of all voluntary disclosure cases handled by the CRA each tax year. If you have unreported income abroad, do not wait any longer. The CRA will catch up with you sooner than later. The VDP or Voluntary Disclosures Program was made to persuade someone like you pay taxes that you have voluntarily or involuntarily ignored. There are no legal actions that can be filed in court after you have submitted a VDP form.
If you come forward deliberately, and list your unreported foreign property, all penalties will be ignored as long as the CRA accepts your disclosure. Even so you must agree to pay all your back taxes. Failure to that might lead to litigation, jail time or fines. This is not aimed at preventing foreign investments and banking though. Depositing money in overseas tax havens is not against the Canadian law. What the law is against is keeping unreported foreign property and profits.
The taxman wants to know how much money you are earning abroad and how you are making it. If you want to have peace of mind, then come out clean about your tax evasion through the CRA’s VDP. One thing that the CRA promises is strict privacy and secrecy of the information you will provide. It claims that all information provided by any taxpayer is handled safely. When you reveal unreported foreign property or income, you could avoid paying partial interest charges on overdue amounts. These amounts start to accumulate the day after your tax payment date.
Between 2010 and 2011, statistics revealed that the CRA waived forty-five million in interests on roughly six hundred million dollars of back taxes owed under the Voluntary Disclosures Program. Keeping unreported foreign property hidden will only make you look like a criminal. A person who dodges taxes is required by the tax collector and there are prices to pay. The longer you wait the higher your unreported foreign property gains will increase and tougher the punishment will be. And as hinted above, your VDP must first be accepted by the CRA.
If you continue to hide money abroad you might risk a jail time. It is good to come out now and avoid being convicted later on. In order to declare your unreported foreign property or earnings, just access the form T1135 on the CRA website. There is special information you will be required to fill in this form before you submit it. This information will be about, but not limited to, the cost of your foreign property and the amount of profits or losses you gain from it. In 2013 CRA changed the requirement on T1135 and made it more strict in reporting details. Getting help from professionals may free you from a lot of future tax troubles in the case of CRA audit.