V.D.: it’s not a disease but an other way out
Today, much of my time is devoted to helping taxpayers repatriate funds from offshore accounts. The mad rush to repatriate is that in the not to distant future these institutions who held your money in confidence for many years and in some cases generations, are now being pressured by politicians both domestic and foreign to disclose the income generated in all accounts and to send information slips to both the holder of the account and the person’s country of residence.
Voluntary Disclosure is not new. Taxpayers have been able to avail themselves of this procedure for many decades.
What must be brought to taxpayers’ attention is that Voluntary Disclosure is not in the “Tax Act”: it is rooted in regulations that are very easily changed.
Upon making an application to the The Canada Revenue Agency and Revenue Quebec, if you happen to be so lucky as to be a Quebec resident, your representative will get a letter stating that a file has been opened and there has been a reference number allocated. In addition it asks the calculation for the income of the taxpayer for all years available be prepared, not less than ten”. I am aware of a situation whereby the taxpayer retained all of his own records and did not have to repatriate records for offshore. He was instructed by his lawyer and his accountant to please give them the records and together they would prepare and calculate the required addition to income. They proceeded to calculate twenty years.
To the amazement of both the law firm and the accounting firm, the government felt that it was obligated to tax the taxpayer for all twenty years. To make matters worse, the reduction allowable for reduced interest only extends for the first ten years. Both the accounting firm and the law firm stated that they were only following the instructions in the Revenue Canada letter and therefore the taxpayer could not take an action against these firms. Based on the calculations that were made, the taxpayer’s account offshore was not large enough to cover the Federal Tax debt.
The question is: “who is right and who is wrong”? I would ask that you please lean in and give me your comments.
But the more fundamental question is: “how much do you want to fight for what you believe is right?” It also shows how important it is to get the right information from the outset.
In my next issue, I’ll give you the next instalment in how this matter ultimately gets resolved.