Canadian Lawyer

40 J U N E 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m When they keep their accounts, more often than not, their existence is not dis- closed to the CRA, Doobay says. These Canadians should be aware that the July deadline is not too far away and should seek help from their tax advisor, she notes. "The Panama Papers have shown us a lot about offshore structuring, including that Canadians are very much engaged with offshore planning," Doobay says. "The average Canadian is not aware of the CRS legislation and what it really entails." Doobay says that, unsurprisingly, the United States has not signed on to the CRS. It kept its current Foreign Account Tax Compliance Act in place, which looks only at accounts holding more than US$50,000, meaning the CRS is actually more encom- passing. She says that when FATCA was imple- mented, the IRS's offshore account collec- tion topped US$10 billion, and she foresees a similar effect for Canadian tax coffers in the wake of the CRS. Robert Reymond, partner at Stikeman Elliott LLP at the London, U.K. office, says tax practitioners need to let their clients know about the CRS. There's not enough information in the market — not just in Canada but internationally. "It probably will come as a surprise to many Canadian residents that their banks, wherever they may be — in the U.K., in France, in Switzerland, wherever — that those banks will now report on them directly to the CRA," he says. If you have money outside Canada — and disclose it correctly — that's fine; but if not, the CRA will now be able to find out. Canadians are required to report any income earned worldwide. In the case of foreign bank accounts, income would mean any interest earned on that account, no matter what the amount. However, once a Canadian hits $100,000 or more in for- eign accounts — at any time of the year, not just tax time — they need to disclose it by filing a T1135, a Foreign Income Verifica- tion Statement. If they fail to file a T1135, there is the Voluntary Disclosures Program, which is a way to come clean about offshore accounts over $100,000 while avoiding a penalty. The failure to disclose results in a maxi- mum penalty of $2,500 per taxation year in which the taxpayer should have filed, and negligence penalties can be imposed as well. Reymond notes Canadian residents already have several different obligations to report foreign assets domestically, so the fact there will be reporting coming in from financial institutions outside of Canada shouldn't change that much for practitio- ners — as long as everybody is doing what they're supposed to be doing. While Reymond says he assumes most are, if any haven't, "they should be regu- larizing their affairs, which could mean through Canada's voluntary disclosure pro- gram. And going forward, they need to plan their affairs in a fully transparent way," he adds. Doobay agrees that if all is being han- dled the right way, lawyers — as well as cli- ents or other parties such as financial advi- sors — won't be affected. But if anyone is "utilizing loopholes, they need to reassess." This has larger repercussions, she notes, adding that estate lawyers, family law law- yers with clients attempting to hide assets L E G A L R E P O RT \ TA X Celebrating Women In Law WOMEN'S TR ANSFORMATIVE LEADERSHIP: EMPOWERMENT BY IMPROVING PARTICIPATION AND REPRESENTATION IN AUGUST COMPANY: Advancing Women's Leadership on the Bench TALES FROM THE FRONT: Lessons on How to Lead LESSONS LEARNED FROM OTHER INDUSTRIES: Ten Innovative and Effective Ways to Attract, Advance & Retain Women THE LONG AND WINDING ROAD: Developing a Career Toolkit SHOULD I STAY OR SHOULD I GO?: How In-House Counsel Are Zigzagging To the Top A SEAT AT THE TABLE: Defining Strategic Leadership for Women on Boards PROGRAM OUTLINE Call: Toll free 1-877-298-5868 or (416) 609-5868 | Fax: (416) 609-5841 | Web: www.lexpert.ca Email: For questions please contact lexpert.questions@thomsonreuters.com, for registration inquiries, please contact lexpert.registration@thomsonreuters.com CONTACT US SAVE THE DATE: Zenith Awards Gala June 22, 2017 | Arcadian Court CO-CHAIR: Bindu Dhaliwal, Associate General Counsel, BMO Financial Group CO-CHAIR: Shanin H. Lott, Managing Director, Talent, Stikeman Elliott LLP JUNE 22, 2017 | ARCADIAN LOFT ntitled-1 1 2017-05-12 10:12 AM

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