May 28th, 2020
Dec 6th, 2012
By Steven Sitcoff
In the last few weeks it has become known that a whistleblower has turned over confidential documents to the UK tax authorities relating to holders of accounts with HSBC in Jersey. This is of particular relevance given that the Canada Revenue Agency (CRA) and Revenu Québec have yet to articulate and implement a clear approach that they would apply in a similar context, namely with regard to the list obtained by them of Canadian-resident account holders with HSBC Switzerland following the theft of data from that institution.
While it is not yet known whether any Canadians are among the list from HSBC Jersey, this along with other incidents of whistleblowers and bank data theft in recent years suggest that offshore banking secrecy is in danger of becoming somewhat of an endangered species. As well, some Canadians continue to hold undisclosed accounts in countries having a tax treaty, or tax information exchange agreement, with Canada. Against this backdrop, the making of a voluntary disclosure with regard to undisclosed accounts or other assets held outside of Canada remains an option worth considering (and will be, in some cases, particularly timely) as it will generally remove the threat of criminal and civil penalties.
The CRA’s approach to these files is even-handed and fair, and clearly aimed at encouraging relevant persons to come forward and comply with their legal obligations to report their worldwide income. While the tax liability for a resident of Quebec who makes a disclosure may seem relatively inequitable as compared to the tax liability for a disclosing person residing elsewhere in Canada, the overall result of making a voluntary disclosure may nonetheless be acceptable to many and thus worth exploring.
Steven Sitcoff is a tax lawyer at Spiegel Sohmer who has experience with a variety of corporate and personal income tax matters, including voluntary disclosures to the federal and provincial tax authorities.