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Voluntary disclosure will allow wealthy Canadians to pay less than they owe the public treasury.
Ottawa (19 July 2010) - The Harper Conservatives are apparently planning to give the wealthy another tax break by allowing those with secret, offshore bank accounts to disclose the fact without paying any penalty.
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Tax lawyers defend the Canada Revenue Agency (CRA) plan as pragmatic while critics decry it as unfair to ordinary Canadians who have no choice about reporting their incomes.
The CRA is reported by the Toronto Globe and Mail to be drafting new requirements for its voluntary disclosure program, a partial-amnesty program that allows people and corporations to declare income and avoid prosecution for tax evasion.
"Tax lawyers across the country say federal officials have told them to expect a more lenient approach toward clients who want to bring back fortunes from tax havens such as Switzerland and Liechtenstein and declare the money to auditors," the Globe says.
Montreal law firm Spiegel Sohmer has issued a newsletter to clients advising that “CRA has quietly let it be known that it has arrived at what appears to be its final decision concerning … repatriation matters.”
"Sources say auditors will now only go back a maximum of 10 years when determining what the government is owed," the newspaper says.
"Previously, voluntary disclosure officers combed through the entire history of recently revealed funds, assessing penalties on interest that, quite often, had compounded over multiple decades.
Under the new rules, someone who stowed away $1-million in a Swiss bank account in 1995 would only be assessed on the interest and gains they had realized from 2000 until today. According to the Spiegel Sohmer newsletter, if the offshore funds date back more than a decade, “it will no longer be necessary to explain the opening capital.”
Hugh Mackenzie, an economist who served as executive director of Ontario’s Fair Tax Commission in the early 1990s, says the Conservatives are sending a message that there are two sets of rules for taxpayers.
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