Canada’s Efforts To Obtain Tax Information From Tax Havens

Categories: Blog, Tax

On October 22, 2010, the Canadian Department of Finance announced that it is entering negotiations towards Tax Information Exchange Agreements with Vanuatu and the Cook Islands.

Canada currently has signed Tax Information Exchange Agreements with 9 countries.  Canada is negotiating Tax Information Exchange Agreements with a further 16 countries.

Tax Information Exchange Agreements are intended to facilitate the exchange of information between jurisdictions in order to aid in the enforcement of domestic tax laws.

The exchange of information will help the Canada Revenue Agency discourage the underreporting of income by Canadian taxpayers through the use of tax havens.

Taxpayers who may be affected by the exchange of information between the tax authorities of these jurisdictions and the Canada Revenue Agency should consider making an application under the Voluntary Disclosures Program.

Under Canada’s Voluntary Disclosures Program, a taxpayer who makes a valid disclosure under the Income Tax Act will be required to pay taxes owing plus interest, but can avoid penalty and/or prosecution.  Further the Canada Revenue Agency has the discretion to grant partial relief in the application of interest accrued on unpaid taxes in respect of years preceding the three most recent years of returns required to be filed.

Penalties and interest often add up to be a substantial portion of the amounts that must be paid to the Canada Revenue Agency.  As a result, disclosure through the Voluntary Disclosures Program can save a taxpayer a significant amount of money.   Further information regarding Canada’s Voluntary Disclosures Program can be found here.

Below is a table showing the countries with which Canada has signed and is negotiating Tax Information Exchange Agreements.

Tax Information Exchange Agreements Signed Tax Information Exchange Agreements Under Negotiation
Cayman Islands
Netherlands Antilles
Saint Lucia
St. Kitts and Nevis
St. Vincent and the Grenadines
Turks and Caicos Islands
British Virgin Islands
Cook Islands
Costa Rica
Isle of Man
San Marino

For more information, please contact a member of the Tax Law Team at Pushor Mitchell LLP.

Tom Fellhauer      250-869-1165