Busted!
It was lunchtime, on a warm day in the spring of 1972. I was excited to get out and play, but we were required to eat indoors first. Upon opening my brown bag, I was greeted by a warm tuna fish sandwich whose stomach-churning aroma could have induced vomiting in a stray dog. In my 10 year old brain, it made more sense to dissect, rather than consume the offering. I'm not sure what came over me next. A steaming open-faced tuna sandwich stared at me, and it just seemed like a good idea to see if I could get it to stick to the ceiling. Much to the amusement of my fellow students, my dexterity was remarkably adept -- but my timing was brutal. On my first try, I splunked the tuna-face to the ceiling directly above my desk. It stuck there, gradually peeling away just as the lunch lady walked in to monitor our classroom space. She was looking directly at me as the sandwich tore itself off the ceiling and landed on my desk in front of me, leaving a few stinky remnants on the ceiling above me for her to gaze at in horror.
I pretended not to notice, then I lied vehemently: "What! It wasn't me!". But I was busted. I spent the next two weeks of springtime lunches (the best playtimes of the year) eating my food in the hallway outside the principle's office.
As sad as my exploit was, there are adults who get themselves in to much worse trouble. Tax evasion is very serious business -- the sort of stuff that brought down guys like Al Capone. For the nervous tax payers who worry they might be on the wrong side of the law, here are a few things to consider:
Offshore Havens
It is estimated that Canadian investors may have significant deposits at UBS a Swiss bank previously known for helping hide foreign assets. After Swiss banking secrecy was broken by a landmark IRA court case, the CRA threatened similar action against Canadians with unreported foreign source income and assets held offshore in UBS or other accounts.
Voluntary Disclosure:
The Voluntary Disclosure Program (VDP) allows Canadian taxpayers to come forward and disclose any omissions or correct any Canadian tax information for previous taxation years without penalty or prosecution. If the CRA accepts the disclosure, the taxpayer would have to pay the taxes owing plus interest but would avoid the penalty charges and even potential criminal prosecution. If the information is not voluntarily disclosed using the VDP and the CRA commences an audit or enforcement action against the taxpayer, then it would be too late to come forward under the VDP and penalties of more than 50 % of the tax owing and possible prosecution may apply.
A valid disclosure must be made on a voluntary basis, must be complete, must involve the potential of a penalty and generally include information that is more than one year overdue.
If you have any foreign-based income or accounts at UBS or elsewhere and think that the issues described above potentially apply to your situation, I strongly recommend that you discuss these issues with your qualified tax and legal advisors to ensure that all of the income and reporting of assets have been done properly and in accordance with Canadian tax legislation. In particular, I recommend that you consult your qualified tax and legal advisors prior to contacting the CRA in any way connected to these issues.
If something doesn't smell right with your taxes, the VDP might be a way to help you clean it up.
Mark Ryan is an advisor with RBC Dominion Securities Inc, member CIPF. He can be reached at mark.ryan@rbc.com.
