What to do if your offshore tax haven has just been outed.

While it’s certainly not illegal to have an offshore account, the release of the “Panama Papers” is sure to send yet another chill down the spines of Canadians who have been hiding money offshore, either directly or through corporations.

Residents not only have to pay tax on their worldwide income but must also disclose the existence and, depending on the size, certain details of offshore accounts annually to the Canada Revenue Agency.

The 11.5 million leaked files from Panama- based law firm Mossack Fonseca, reported by a number of news organizations Monday, purports to reveal the secret ownership of bank accounts and companies in 21 offshore jurisdictions. Failure to disclose these kinds of assets could result in tax on unreported income, gross negligence penalties, failure-to-file penalties, and arrears interest.

In some cases, depending on the size of the account, the tax liability, penalties and interest can exceed the balance in the offshore account.

As any tax lawyer will tell you, if you’ve failed to report worldwide income on your returns or failed to disclose the existence of offshore accounts (when required), your best bet to come clean is by filing a “voluntary disclosure” with the CRA.

Under the voluntary disclosure program, if you come forward to the CRA to disclose unreported income, you are protected from criminal prosecution, the imposition of penalties, interest relief and, in many cases, you can limit your tax liability on the unreported income generated in the offshore account to the past ten years.

Once the CRA initiates an audit, however, you are precluded from using the voluntary disclosure program, which means you may wish to come forward before you are ratted out, either by a disgruntled former business associate or a former spouse or partner, who knew of your offshore ways.

In 2013, t he CRA announced the launch of its new offshore tax informant program, which can provide financial awards to individuals who provide information related to major international tax noncompliance that leads to the collection of taxes owing.

In addition, last year, the CRA launched its electronic funds transfer ( EFT) initiative to crack down on international tax evasion and aggressive tax avoidance. Under this regulation, certain financial intermediaries, including banks, have had to report to the CRA both i ncoming and out- going international EFTs of $10,000 or more.

According to the CRA, these reports allow it “to better identify higher-risk taxpayers and files and, in turn, more effectively identify taxpayers who participate in international aggressive tax avoidance and attempt to conceal income and assets offshore.”

Finally, last month’s fed- eral budget included a proposed investment of $ 444.4 million over five years for the CRA to enhance its efforts to crack down on tax evasion and combat tax avoidance. The money will allow the agency to hire additional auditors and specialists, develop robust business intelligence infrastructure, increase verification activities and improve the quality of investigative work that targets criminal tax evaders.

This additional spend- ing is expected to bring in revenue of $ 2.6 billion over five years, which is among the actions necessary “to improve the integrity of Canada’s tax system — on both the international and domestic fronts.”