Canadian crackdown on offshore investment tax evasion underway |
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| News - Tax | |||
| Wednesday, 16 December 2009 10:07 | |||
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Minister of National Revenue Jean-Pierre Blackburn said that they could be asked to hand over information about clients who invest abroad as the Canada Revenue Agency cracks down on offshore tax havens. It comes amid revelations this week that a recent CRA audit had prompted investigations that financial advisors may have been encouraging clients to establish offshore accounts in Liechtenstein. The CRA is currently investigating two RBC Dominion Securities investment advisors in connection with the establishment of offshore entities with LGT Group in Liechtenstein. Although holding money abroad is not a crime, most of the Canadians who held these offshore accounts have either made voluntary disclosures admitting to evading taxes or are being audited by the CRA for tax evasion. The CRA has since requested a list of RBC DS clients across the country who have dealt with the two advisors, as it attempts to expose other Canadians who are evading taxes by failing to report income earned in offshore accounts. In response to the allegations, David Agnew, CEO and national director of RBC Dominion Securities, said the firm never encouraged clients to establish such offshore accounts. ‘As a firm, we have never encouraged Canadians, not 25 years ago and not today, to set up entities in Liechtenstein and we have never instructed our investment advisors to recommend that practice,’ Agnew said in a statement. Blackburn said the agency may seek similar client lists from all Canadian banks. Today, it’s RBC DS. Tomorrow, and in the next few weeks, few months, we will look at all other Canadian banks in the country to obtain information about Canadians who do investing abroad,’ he said. Blackburn said that addressing offshore tax havens is a key priority for the CRA. ‘We are serious in this matter. Our eyes are on every bank in this country,’ he added. According to Robert Kepes, a partner with Toronto-based law firm Morris & Morris who represents clients in tax dispute cases with the CRA, said that while clients are legally responsible for their own tax filings, advisors can face penalties for their participation in making a false statement on clients’ tax returns. He explained that while advisors may think they are helping clients, they may not have enough of a comprehensive grasp of tax law to be advising clients on the matter. ‘The fact is that you can end up crossing the line, where you end up participating or helping a person do something wrong,’ he said. Add this page to your favorite Social Bookmarking websites          
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