Mark Feldstein & Associates Tax Accounting Blog

2013 Budget Announces New FOREIGN INCOME SNTICH LINE

When the 2013 budget was released this past March, there was a new measure put in place to help the government find major tax cheats.

There is already a snitch line for people to call and get someone audited, but this new line is directly aimed at individuals hiding amounts abroad and this time, the CRA is willing to pay for results.

If an amount over $100,000 is recovered by the Canada Revenue Agency as a result of your tip, you will be REWARDED BY THE GOVERNMENT WITH 15% OF THE FUNDS COLLECTED.

And there are many people out there that would call on their neighbours, ex-spouses, ex-business partners, former employers or that person who is always taking weekend trips to the Bahamas.

If the prospect of someone calling the government on you scares you, it should. There are huge penalties and interest associated with under-reporting your income. Even if you are not earning any income on your overseas money, you still will be hit with severe penalties if you had not submitted a T1135 Foreign Income Verification Statement with each annual tax filing.

There is also the possibly to be charged with a gross negligence penalty or even criminal prosecution.

Once the CRA is alerted to your activities, you are caught.

If you decide to come forward and declare this income before the government finds you, you may be eligible to file a Voluntary Disclosure which will waive the penalties and any criminal prosecution. You will still owe taxes on any foreign income earned, but without the penalties the amount will be greatly reduced.