Banks to hand over off­shore files to CRA

The Hamilton Spectator - - CANADA & WORLD - JIM BRONSKILL

OT­TAWA — The Trudeau gov­ern­ment has won a round in its bat­tle against off­shore tax cheats.

Two banks have agreed to give the fed­eral rev­enue min­is­ter in­for­ma­tion from the ac­counts of a Caribbean fi­nan­cial in­sti­tu­tion to help the gov­ern­ment crack down on Cana­dian tax evaders.

The Fed­eral Court of Canada has ap­proved fed­eral re­quests for seven years’ worth of trans­ac­tion in­for­ma­tion from the Royal Bank of Canada and Citibank, N.A., re­lated to ac­counts in the name of Cay­man National Bank Ltd.

The Royal Bank and Citibank — nei­ther of which op­posed the fed­eral de­mands — have 120 days to hand over records from Jan. 1, 2009, through Dec. 31, 2015, in­clud­ing ac­count state­ments, de­posit slips, che­ques, bank drafts and wire trans­fer orders.

The Canada Rev­enue Agency plans to comb through the data to see if Cana­dian res­i­dents are us­ing the Cana­dian dol­lar ac­counts, opened by Cay­man National Bank, to trans­fer funds to Canada and avoid re­port­ing tax­able in­come from their for­eign hold­ings.

The move is part of the gov­ern­ment’s ongoing ef­forts to fight off­shore tax eva­sion, said rev­enue agency spokesper­son David Wal­ters. “The CRA is com­mit­ted to com­bat­ing the abu­sive use of off­shore ju­ris­dic­tions and pro­tect­ing the in­tegrity of the Cana­dian tax sys­tem.”

In an af­fi­davit filed with the Fed­eral Court, David Letke­man, an au­di­tor with the agency’s off­shore com­pli­ance sec­tion, says past in­ves­ti­ga­tions have con­firmed that Cana­dian res­i­dents use ac­counts with for­eign fi­nan­cial in­sti­tu­tions to hide tax­able in­come.

“In my ex­pe­ri­ence, the ex­pec­ta­tion of such per­sons is that the CRA would not dis­cover the en­ti­ties, ac­counts and omit­ted in­come.”

In this case, the rev­enue agency has not yet iden­ti­fied Cana­di­ans sus­pected of an off­shore tax dodge.

How­ever, Letke­man says the agency was alerted to the pos­si­ble Cay­man ruse by a Cana­dian woman who vol­un­tar­ily dis­closed her deal­ings through a spe­cial pro­gram that al­lows those who come for­ward to avoid prose­cu­tion.

Doc­u­ments showed the woman’s funds flowed from the Cay­man Is­lands — through Cay­man National Bank’s cor­re­spon­dent ac­count with the Cana­dian branch of Citibank, N.A. — to a Cana­dian bank ac­count.

As a re­sult of the rev­enue agency’s re­view, she was or­dered to pay a to­tal of more than $1.2 mil­lion plus in­ter­est for un­re­ported cap­i­tal gains re­lated to off­shore prop­erty.

The rev­enue agency ac­knowl­edges that some of the in­for­ma­tion it seeks from the two banks may al­ready be in its pos­ses­sion as a re­sult of fed­eral mea­sures that in 2015 in­tro­duced manda­tory re­port­ing of in­ter­na­tional elec­tronic funds trans­fers of $10,000 or more.

How­ever, the agency says, au­dits have re­vealed cases where Cana­dian res­i­dents at­tempt­ing to con­ceal in­come and as­sets had pe­ri­od­i­cally paid them­selves “al­lowances” of less than $10,000 from off­shore ac­counts.

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