If you’ve been relying on the banking secrecy laws of offshore jurisdictions to hide your foreign assets from the Canada Revenue Agency (“CRA”) then I’ve got bad news for you. The bank secrecy laws of most foreign jurisdictions won’t protect you anymore.
Since 2016, the Canadian Government has signed Automatic Exchange of Information (“AEOI”) agreements with most Western countries including low-tax jurisdictions. Implementation started in 2018. The AEOI is an international standard that has been adopted by 101 countries to automatically exchange tax information between countries that have signed up the this standard. This means that the CRA will be able to get information about bank accounts held by Canadian residents in AEOI countries.
Canadian residents are required to report foreign assets on their tax returns if at any time during the tax year they had foreign assets with a total cost value of over $100,000. If you don’t report, then you’ll be hit with pretty steep penalties. There are some exceptions.
If you are a Canadian resident and you have an unreported foreign bank account or unreported foreign income, you should consider filing a Voluntary Disclosure application to avoid penalties and prosecution if the CRA finds out about it before you disclose it to them.