Ottawa wants to go after your undisclosed Swiss bank accounts..!

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bizman

Corporate Services
Mentor Group Gold
Even if this article start to be very negative it will went out to be great reading for manies and it put a spot on how important it is to structure your offshore companies in a legal way to still safe taxes!


Ottawa wants to go after your undisclosed Swiss bank accounts, and by extension, accounts you may have in Bermuda, the Bahamas, Guernsey, Israel, Liechtenstein, Luxembourg, Lebanon, Cyprus, Panama and every other country where Canadian residents may have squirreled away funds. To be more precise, the government wants to make sure that you're declaring all your foreign income.


That's nothing new because Canadian residents are required to declare income from all sources.


But since our neighbours to the south cut a deal with Union Bank of Switzerland in August that supposedly put an end to Swiss bank secrecy, there seems to be some movement here to get on a similar bandwagon. UBS and the U.S. Internal Revenue Service signed a settlement agreement that requires UBS to provide details on about 4,500 accounts of U.S. clients. It is part of a deal signed by the U.S. and the Swiss Confederation, and Canada is apparently seeking similar information about Canadians.


The reality is that it's perfectly legal to structure your affairs to minimize taxes. Moreover, many financial institutions, including major Canadian and foreign-owned banks and money management firms, have offshore foreign affiliates that will work with Canadians seeking to minimize taxes.


It's quite common for people to use offshore trusts in estate planning, especially if someone has assets in various jurisdictions or children who are residents of foreign countries.


Generally, an institution's private banking advisor, along with tax, estate planning and other experts, would work with the client to develop a perfectly legal tax-efficient investment and estate planning program, often using trusts, holding companies or both.


Some institutions offered off-the-shelf trusts to help these people meet their objectives, and I have no doubt that there is a lot of money sitting offshore, where it can be invested and the profits compounded untaxed.


However, I have doubts that anyone trolling through a list of bank accounts with major institutions in Switzerland or anywhere else will find many Canadian addresses. Someone putting the time and effort to set up accounts offshore almost certainly had top-notch legal and accounting advice and would use local trustees who will not show up on a search for Canadian postal codes.


That said, there are people who undoubtedly took short cuts to hide funds that were undeclared income, or who simply thought that by investing offshore they could avoid or evade taxes. Their schemes can range from having a relative open an account in the relative's name to going through advisors who claimed expertise in the offshore arena. Some of course lost all their money.


An example of what can go wrong for investors who believe in the tooth fairy involved the Sabourin and Sun Group of companies, which the Ontario Securities Commission closed down.


Among other frauds, Sabourin and Sun ran what are called prime bank investment schemes, which involve the supposed purchase and sale of fully negotiable bank instruments. The problem is that neither these instruments nor the markets on which they allegedly trade actually exist. The guarantees, high rates of return and the secret investment programs that were part of the scheme were fictitious as well.


Anyone who loses money under such circumstances can do little. You are unlikely to get much sympathy from the authorities of the country where you invested your money, and much less from police here as you explain that your money was lost while you were trying to avoid paying taxes in Canada.


Most offshore schemes involve investments and accounts in nominee names which are supposed to protect privacy. If you are in one of these, ask yourself what happens if the advisor or your relative dies. What documentation do you have that proves there are accounts that hold your money?


There is also the possibility that you might die. What arrangements have you put in place for when that happens? If you haven't brought your heirs into the picture, it may be impossible for them to get access to the funds.


Despite the U.S. agreement with UBS and Canada's request to that bank for information on Canadian accounts, it is business as usual for organizations offering offshore services. A web search for "offshore banking" will provide pages of contacts ranging from well known banks to offshore law firms.


Of course if you already have foreign property that you acquired without getting professional advice, and which you've neglected to tell CRA about, and you are now afraid that you could have a problem, getting a Canadian lawyer involved might be an option. Most of the major law firms have tax litigation departments. Ask if the consultation is free, whether the litigator has solved many problems similar to yours, what your expected costs will be, the range of potential outcomes and time frame, and whether the person you will be talking to is the person who will actually handle your file.
 

mneilson

Corporate Services
Business Angel
After the success of US in getting the secret data from UBS every country would try to obtain such information from Swiss Banks. Ottawa also wants to go after the undisclosed Swiss bank accounts of their citizens. I think engaging lawyers to find a solution may be a good step.
 

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