Harper Government Cracking Down On Canadians With Offshore Property And Income With New Rules
Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA. Increased reporting requirements include: the name of the specific foreign institution or other entity holding funds outside Canada; the specific country to which the foreign property relates; and the income generated from the foreign property.
VANCOUVER -Prime Minister Stephen Harper and his Conservative government is aggressively cracking down on international tax evasion and tax avoidance with new rules.
Parliamentary Secretary Cathy McLeod met with members of Certified General Accountants (CGA) Canada to discuss taxation issues, including how best to combat international tax evasion and aggressive tax avoidance.
“Our Government is committed to combating tax evasion and getting tough on tax cheats. Since 2006, we have introduced over 75 measures to improve the integrity of the tax system,” said McLeod. “The strengthened reporting requirements are just one example of the actions being taken by our Government to crack down on tax cheats. These measures are great news for hardworking Canadians who pay their fair share and bad news for those who may seek to cheat the system.”
Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA. The criteria for those who must file a Foreign Income Verification Form (T1135) has not changed; however, the new form has been revised to include more detailed information on each specified foreign property.
Increased reporting requirements include: the name of the specific foreign institution or other entity holding funds outside Canada; the specific country to which the foreign property relates; and the income generated from the foreign property.
The CRA will use the additional information to ensure all taxpayers comply with Canadian tax laws, through activities including education and audit. Failure to report income from domestic or foreign sources is illegal, and Canadians should know that the CRA actively pursues cases of non-compliance. Tax evasion and aggressive tax avoidance can lead to significant taxes, interest and penalties.
These measures are in addition to already strict rules regarding offshore cash announced by Harper at the G-8 Lough Erne Summit in Northern Ireland. The G-8 declaration and the Harper Government’s Action Plan on Transparency of Corporations and Trusts will uphold a high level of transparency.
Harper’s new rules also propose to extend the reassessment period for a tax year by three years if a taxpayer has failed to report income from a foreign property on their income tax return and Foreign Income Verification Form (T1135) was not filed, late-filed, or included incorrect or incomplete information concerning a foreign property.
In addition to the new filing requirements, Harper’s plan proposed other strong new measures to combat international tax evasion and aggressive tax avoidance.
These include:the new Stop International Tax Evasion Program; the mandatory reporting of international electronic funds transfers over $10,000 to the CRA; and, streamlining the judicial process that provides the CRA authorization to obtain information from third parties such as banks.
The Harper Government also recently announced the creation of a dedicated team to implement these measures and a $30 million investment to target international tax evasion and aggressive tax avoidance.
“We are pleased to see the Government taking action on this important issue. Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes,” said Carole Presseault, Vice President of Government and Regulatory Affairs at CGA Canada. “Our members support the fight against tax evasion, as it hurts all Canadians by reducing government revenue that other law abiding taxpayers are required to make up, and providing an unfair advantage to those seeking to cheat the system.”