CANADIANS AND BARBADIANS who live and pay taxes in Canada but own property in Barbados will soon have to tell Canada’s Revenue Agency about the value of their holdings in their birthplace.
And if they transfer more than CAN$10 000 (BDS$18 591) the information on their transactions will go to Canadian tax authorities who are setting up a system designed to force them to pay taxes on their finances.
The new system aims to end the shield which Canadians have erected to protect their assets from the long arms of tax authorities in Ottawa.
Under existing rules, the taxpayers in Canada are not required to provide information on specific foreign institutions or the profits earned from the assets.
Gail Shea, Canada’s Minister of National Revenue, is introducing new stringent rules that will apply to the 2013 tax year, and it is all part of an effort to clamp down on tax evasion or avoidance.
The tough new tax forms will cover holdings valued at more than CAN$100 000 (BDS$185 919), and taxpayers will have to reveal the names of countries where the assets are lodged, the names of the financial institutions controlling the holdings and any income derived from the overseas funds.
“Our government is committed to combatting tax evasion,” said Shea in Ottawa who explained that the additional information would allow Canada’s Revenue Agency to ferret out tax cheaters and boost the country’s revenue collection.
Hundreds, perhaps thousands of Barbadian- and Canadian-born taxpayers own real estate, corporations, mutual fund accounts and other forms of investment in Barbados.
And while the action was not specifically geared to reach Barbadians but instead is targeting Canadians involved in the offshore financial services sectors around the world, all taxpayers in the North American country will be caught in the net being spread in Canada.
The step could turn out to be another blow to Barbados’ offshore sector, which in recent months has been forced to meet increasing competition and deal with measures designed to compel Canadians to pay up. Donville Inniss, Barbados’ Minister of International Business was recently in Toronto trying to promote the Caribbean country as an offshore centre while denying the island was a tax haven.
“We are pleased to see the government taking action on this important issue,” said Carole Presseault, vice-president of government affairs of the Certified General Accountants Association of Canada.
“Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes.”
Tax avoidance is now a hot-button issue on the priority list of the Stephen Harper administration, so much so that Ottawa plans to spend CAN$30 million (BDS$55.8 million) over the next five years to crackdown on Canadians who may not be paying their fair share of taxes on assets held offshore accounts.
Barbados, often labelled a tax haven, has become identified by Government critics and advocates of the crackdown as a domicile which facilitates widespread tax evasion.
More than CAN$50 billion (BDS$93 million) in investment by Canadians may be passing through Barbados on its way to other countries, especially those in Europe.
But the measures being taken by Canada do not stop at merely reporting foreign assets. The government plans to spend about CAN$15 million (BDS$27.8 million) on a system designed to track down foreign electronic transfers of at least CAN$10 000 (BDS$18 591) each to and from Canada.
That is in addition to a tax evasion tip line that will reward whistle-blowers up to 15 per cent of the amount of taxes collected from previously hidden accounts that exceed CAN$100 000 (BDS$185 919).
