4f5716bf
XPost: can.general, can.politics, ott.general
I don't see much here about the tax havens most North Americans have easy
access to - like
the Cayman Islands and Bahamas. Is this just going to shift the hidden monies
from
European banks to countries with less to lose from pressure from the U.S. or
Canada?
"Alan Baggett" wrote in message
news:a5253f2f-493b-4dd8-a0c2-f47ba7d13d6e@d37g2000yqm.googlegroups.com...
The Rich are Richer… and why they will stay Richer :CRA SOTW
Greg McArthur
From Thursday's Globe and Mail Published on Thursday, Jul. 15, 2010
3:00AM EDT Last updated on Thursday, Jul. 15, 2010 7:48AM EDT
Tax collectors are set to relax the rules for confessing secret,
offshore accounts, a move heralded by tax lawyers as pragmatic and
decried by critics as unfair to ordinary Canadians who have no choice
about reporting their income.
For the past few months, the Canada Revenue Agency has been drafting
new requirements for its voluntary disclosure program, the partial-
amnesty program that allows people and corporations to declare income
and avoid prosecution for tax evasion.
The changes will bring Canada more in line with the clemency program
used in the United States, which kickstarted a global race of
taxpayers scrambling to come clean when it forced Swiss bank UBS to
release details on thousands of suspected tax evaders.
Although the agency declined to comment for this story, 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. One law firm, Montreal’s 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. 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.
“There’s no question, the taxpayer’s getting away with a lot,” said
David Sohmer, a partner at the firm and one of the most vocal
proponents of the new rules. Mr. Sohmer has repeatedly complained to
federal officials that many of his clients – parents of baby boomers,
and quite often, immigrants to Canada, he says – want to avoid leaving
a financial mess for their heirs, but are repelled from using the
program when they learn that the amount owing could nearly equal the
value of their holdings.
“You can take a tough stance and say we’re going to chop your hand off
if you have money offshore. But what good is that if the money stays
offshore? The politicians have to be pragmatic,” he said.
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.”
But what’s missing from the proposed changes is any sign that tax
collectors are pursuing those accounts abroad as aggressively as the
U.S.’s Internal Revenue Service, said Hugh Mackenzie, an economist who
served as executive director of Ontario’s Fair Tax Commission in the
early 1990s. While it’s true that the U.S. voluntary disclosure
program has been more forgiving, the country has also wielded a much
bigger stick, he said.
Besides the investigation of UBS – which resulted in a $780-million
fine for the bank – U.S. prosecutors have also launched a criminal
investigation into American clients of HSBC with accounts in Asia.
European countries have also gotten in on the act. As recently as
Wednesday, German authorities raided all 13 branches of Credit Suisse
in a similar probe.
“What the Americans have done – they’re not waiting for Americans to
decide to bring some of the money back home again. They’re going to
the government of Liechtenstein and the government of Switzerland and
basically saying, ‘If you don’t tell us who holds these accounts we’re
going to do bad things to you,’” Mr. Mackenzie said.
“In that part of the forest, Canada is not exactly leading the way.”
By loosening standards for voluntary disclosures, the government is
sending a message that there are two sets of rules for taxpayers, Mr.
Mackenzie said. “If you start with the premise that taxes owed are
public property, it would be like if an ordinary guy saw three
federally owned trucks parked on the street and stole all three of
them, and then ... through his lawyer anonymously approached the
government and said, ‘Well, I’ll own up to having stolen the trucks if
you let me keep two of them.’”
Such an argument ignores the rigorous realities of tax collection,
said Andre Rachert, a Victoria tax lawyer, who also welcomed the
changes. Not only will it encourage people to come forward, their
funds will be back in the domestic economy, which benefits all
Canadians, he said.
“It’s not only back taxes. It’s future taxes you’re going to get,” he
said. “We want the people in the system.”
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Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
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Alan Baggett – Tax Collector’s Bible
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