In order to address the issue of offshore tax evasion, the Canadian federal government signed an automatic exchange of tax information agreement (AEOI) with the Swiss government. This agreement will see the two countries automatically share bank account/financial account information with each other. The target bank accounts are those held by residents of the other country. The purpose is to help the Canadian government detect and address cases of tax evasion and to ensure compliance with Canadian tax laws.
The agreement will require financial institutions in the two countries to identify accounts held by non-residents and report the information back to their respective governments. The Swiss government will then share the information with the Canada Revenue Agency and vice versa.
The information sharing is intended to start on January 1st 2018. Financial institutions in both countries are required to have procedures in place to identify non-resident accounts and transmit information by that date.
If you are a Canadian resident with undisclosed assets in a Swiss bank account, you run the risk of being audited on the basis of an information received from the Swiss authorities under the AEOI. You will then be exposed to a particularly nasty assessment including hefty penalties, interest and possible criminal prosecution for tax evasion.
One possible solution is to make a voluntary disclosure through the CRA’s Voluntary Disclosure Program (VDP). Revenu Québec has an equivalent program. This program effectively lets you rectify the situation whilst being granted interest and penalty relief and avoiding criminal prosecution.
A voluntary disclosure, as the name suggests, must be made voluntarily. That is before being on the CRA’s radar.
It is wise, however, to seek expert advice before making a voluntary disclosure. We will make sure a voluntary disclosure is the appropriate solution in your case, and if it is, we will take great care in preparing it properly in order to minimize your tax bill.
A voluntary disclosure can also be made anonymously (without disclosing your identity) through our firm.
Act now and call us before it’s too late.
Sirois & Cohen