ADVICE CENTER
5 January 2016

Unreported Offshore Income

RS
Rotfleisch & Samulovitch P.C.

Contributor

Rotfleisch Samulovitch PC is one of Canada's premier boutique tax law firms. Its website, taxpage.com, has a large database of original Canadian tax articles. Founding tax lawyer David J Rotfleisch, JD, CA, CPA, frequently appears in print, radio and television. Their tax lawyers deal with CRA auditors and collectors on a daily basis and carry out tax planning as well.
Canadian residents are required to report worldwide income from all sources for Canadian Income Tax purposes and offshore assets in excess of $100,000 on form T1135.
Canada Tax Assistance

Canadians Required to report worldwide income from all sources

Canadian residents are required to report worldwide income from all sources for Canadian Income Tax purposes and offshore assets in excess of $100,000 on form T1135. If you fail to do this, or if you choose an offshore structure that violates the intention or spirit of the Canadian Income Tax Act, you could face a battle with the Canada Revenue Agency, and if you lose you will be subject to interest and penalties. We are a Toronto income tax law firm who can advise taxpayers in any Canadian province and assist non-residents immigrating to Canada.

Have foreign source income?

Canada has entered into an extensive series of Income Tax Treaties designed to prevent double taxation. If you have foreign source income be sure to review the relevant treaty.

Canadian residents are taxable in Canada on their world income

Canadian residents are taxable in Canada on their world income. This includes income or capital gains earned offshore, such as through the rental or sale of a foreign property such as a vacation condominium in the Caribbean or elsewhere. Failure to report such income is tax evasion and is punishable by a fine or even a jail term. A voluntary disclosure will avoid prosecution and penalties.

Property in the U.S

If you own property in the U.S., your estate may have to pay U.S. estate tax on the property after your death. The U.S. imposes its estate tax on all assets owned by Canadians that it considers to be U.S. property, which includes real property such as vacation homes and may include other items such as furniture. In addition, shares in U.S. corporations and U.S. Government Savings Bonds are considered U.S. property even if the certificates are kept in Canada.

Offshore (non-Canadian) corporation may be taxable in Canada

An offshore (non-Canadian) corporation may still be taxable in Canada if the guiding mind and management of the corporation are in Canada. In order to avoid Canadian income tax an offshore corporation must be managed offshore.

Take Note
This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

Contributor

Rotfleisch Samulovitch PC is one of Canada's premier boutique tax law firms. Its website, taxpage.com, has a large database of original Canadian tax articles. Founding tax lawyer David J Rotfleisch, JD, CA, CPA, frequently appears in print, radio and television. Their tax lawyers deal with CRA auditors and collectors on a daily basis and carry out tax planning as well.

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