The tax collector is the same no matter which country you live in. They will leave no stone unturned when going after a delinquent tax payer. That’s why people with unreported foreign income to the CRA must be aware of the CRA’s new methods of getting to them. The Canada Revenue Agency has maximized enforcement on unreported foreign income to the CRA through its brand new OTIP (Offshore Tax Informant Program). Mainly the CRA is after Canadians who own foreign properties and it wants to be informed about the losses or profits earned on the disposal of such properties.
It is obvious that the CRA wants to know the country in which your property is located. It wants the name of the bank or any other entity that holds your funds outside of Canada, the identity of foreign companies in which you are a shareholder, the amount owed to you by foreigners and a description any form of asset, including land, which you have outside of Canada. This alone shows how serious the CRA wants to track unreported foreign income to the CRA from tax payers who do international deals.
Are you among the many Canadians who do not understand what must be included in their income for taxation purposes? This knowledge is necessary to avoid facing unreported foreign income to the CRA penalties. The Judicial rulings and the CRA describes taxable income in different ways.
First it is the income earned from being employed including bonuses, salaries, wages, stock options, retirement pensions, fringe benefits, interest free loans and personnel allowances. There are definitely profits earned from a company.
Income from assets or properties include rental income even from leased rooms in your home, profits earned on the sale of real assets and capital gains on the sale of corporation shares.
There is also income earned from investment properties such as dividends. You must consider all the above when calculating your unreported foreign income to the CRA . Even those who make money on the internet must report their income to the CRA to comply with the Income Tax Act. But if you are making money in a jurisdiction that already taxes your income or that partakes in the Canadian Tax Treaty your case is special and will be treated as so.
You need a tax professional though to determine how your income will be reported to the CRA. The items that are not taxable or included in the taxable unreported foreign income to the CRA include lottery winnings, gift, inheritances, damages paid because of being a victim of a criminal accident, benefits from a deceased life insurance policy holder and Canada Child Benefit Tax Credits and so on.
If you invest non-taxable income the interest rate that you will earn as a result will become taxable unreported foreign income to the CRA. If unreported foreign income to the CRA is for the previous tax year, the taxpayer should amend the changes. You may be penalized in form of penalties and interest charges as of the date the filing deadline was due. If you want to report foreign income that is older than a whole year you can submit the Voluntary Disclosures Program.