Lately I've noticed a number of articles regarding bank
accounts held offshore by Canadian residents. Coincidentally, the
increased media attention has occurred while leaks about offshore
account information abound.
While there's nothing wrong with having a bank or investment
account in a tax haven, if you're a resident of Canada, you
must report any income or capital gains earned in those offshore
accounts on your Canadian tax return. Failure to report income on a
Canadian tax return can result in significant penalties on top of
the taxes payable and resulting interest.
In most cases, it's unlikely that much, if any, of the
income or capital gains earned in such offshore accounts has ever
been reported to the Canada Revenue Agency (CRA). With the details
of those accounts possibly becoming public, it can safely be
presumed that a number of Canadian resident taxpayers will want to
come clean with the CRA.
