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unattractive for them to do that." To make matters worse, the revenue agency is also inconsistent in how it administers the amnesty, she says. Some agency officials will ignore income past the 10-year period or offer a reduc- tion on the arrears interest rate, while other officials will take a more strict approach. That inconsistency, which was recognized but not ultimately fixed with a number of CRA reforms, makes it impossible for tax lawyers and accountants to predict what the implications of a voluntary disclosure might be and what the client will have to pay in the end. "That's a real problem because you don't know what you are going to get, depending on who you deal with," says Woodyard. Woodyard and other tax practitio- ners would like to see the CRA change its 10-year amnesty limit and consis- tently apply the program across the country. "It should put a finite limit on how far back it will go," she says. "It behooves the CRA to provide a measure of certainty to these people because it is found money from the CRA's perspective." While international organizations such as the International Monetary Fund, the OECD, and the G8 group of nations are paying increasing atten- tion to the subject of offshore financial centres, especially in the wake of the financial crisis, there is a recognition that not all OFCs are created equal and that these centres often engage in legiti- mate practices. In a report in 2000, the IMF defined OFCs as a place where "the bulk of finan- cial sector activity is offshore on both sides of the balance sheet . . . where the transactions are initiated elsewhere, and where the majority of the financial institutions involved are controlled by non-residents." A more simple definition might be any small, sparsely populated, low-tax jurisdiction which specializes in providing the corporate and commercial services to non-residents in the form of offshore companies and the investment of offshore funds. The United Nations agency's report identified a number of uses for OFCs: for offshore banking licences (whereby a mul- tinational company sets up an offshore bank to handle foreign-exchange opera- tions or international financing); to set up offshore corporations or limited-liability international business corporations; to create captive insurance companies to manage risk and minimize taxes; to cre- ate special-purpose vehicles to engage in financial activities in a more favourable tax environment; for tax planning and asset management and protection for a wealthy individual; and tax evasion and money laundering. At the time of the business investment chamber of com- merce to Canada," says Michael Cadesky, principal of Cadesky and Associates LLP of Toronto and chairman of STEP Canada, the Society of Trust and Estate Practitioners. That does exclude private individuals or people representing trust companies and service providers from "many, many countries because Canada is considered a significant marketplace," he says. Cadesky describes the establishment of offshore trusts and corporations as "a "The offshore world is tired of being the world's whipping boy." — John Collis, Conyers Dill & Pearman report, the IMF estimated that offshore finance assets totalled US$4.6 trillion with about $900 billion in the Caribbean, $1 trillion in Asia, and the remainder in international financial centres such as London, England, and New York. Depending on the definition uti- lized, the numbers of OFCs around the world range between 14 and 69, the IMF found. It settles upon the Financial Stability Forum's list of 42 jurisdictions, which groups OFCs into three categories depending on their standards and inter- national co-operation. The top-ranked group, viewed as co-operative with a high quality of supervision and inter- national standards, is made up of eight countries including Switzerland, Isle of Man, Guernsey, and Jersey. The sec- ond group, with procedures for supervi- sion and co-operation but performance below international standards, is made up of nine countries including Barbados, Bermuda, and Bahrain. The third group, characterized by a low quality of supervi- sion, unco-operative, and operated with little regard to international standards, comprises a group of 25 countries rang- ing from Liechtenstein to the Bahamas and the Cayman Islands. Representatives of OFCs do not typi- cally make business development forays into target countries such as Canada. "The exception is Barbados who from time to time do send delegations or their series of unique situations." Giving the example of a new Canadian who needs to create an offshore trust eligible for a five-year statutory tax exemption, he says the process would start with intro- ducing the individual to a trustee in an offshore (usually zero-tax) jurisdiction. "Very often we would arrange for the cli- ent to meet with the trustee. Sometimes we would go to the offshore jurisdiction with the client but often the client would go on their own." Although governments remain hos- tile to the idea of their citizens putting money into OFCs, the jurisdictions are doing a better job in reporting their activities. According to the OECD in its 2010 report, the so-called "gray list" of tax havens that have not fully imple- mented internationally agreed-upon tax standards has dropped to 17 from more than 40. That is either a victory in the effort to curtail untaxed and illicit money or, as critics say, proof the OECD set its compliance standards too low. The increased scrutiny of OFCs help- ed spur the creation of the International Financial Centres Forum last December by a number of law firms operating in small international financial centres led by Appleby, Conyers Dill & Pearman, Mourant du Feu & Jeune, Ogier LLP, and Walkers, advised by Stikeman Elliott LLP. "The offshore world is tired of being the world's whipping boy," John Collis, www. C ANADIAN Law ye rmag.com JUNE 2010 31