Last year, Statistics Canada revealed that in 2003 Canadians invested $88 billion in off-shore “tax havens”, a figure that’s eight times greater than in 1990. According to Auditor General Fraser, Canadians have avoided hundreds of millions of dollars in taxes through the use of tax havens, located primarily in Barbados, Bermuda, the Cayman Islands, the Bahamas and Ireland.

The Canadian Government has become increasingly concerned about this loss of tax revenues.

In late November, Finance Minister Jim Flaherty announced that Ottawa is reviewing the use of tax havens to avoid taxation. Financial experts suggest that the 2007 budget will include amendments to the income tax act to “ensure that income earned by Canadians through foreign jurisdictions, including tax havens, is subject to tax as if it had been earned in Canada.”

Now, the House of Commons is weighing in on the issue. According to an article in The Toronto Globe & Mail; “The federal government [should] eliminate the use of tax havens in an effort to ensure that all corporations, businesses and individuals pay their fair share of taxes,” the House of Commons finance committee said yesterday in a report making suggestions on what should be in the 2007 budget.

Tax lawyer Paul DioGuardi says this legislation has been in limbo since 2001, and if Flaherty includes this amendment in his 2007 budget, it may very well be made retroactive to 2001. That means billions of dollars will be subject to tax collection by the Canada Revenue Agency. It also exposes Canadians with offshore accounts to potential charges of criminal tax evasion and crippling civil penalties if they fail to take steps to report this income on their Canadian tax returns.

Canadians with unreported offshore income can resolve their tax situation without prosecution or penalty by seeking a tax amnesty disclosure.The DioGuardi AmnestyRx lawyer-negotiated tax settlement ensures that the taxpayer’s identity remains confidential until such time as a settlement is presented to the tax authorities and accepted in principle.

If you have income offshore in Barbados, Bermuda, the Cayman Islands, the Bahamas or Ireland, contact DioGuardi Tax Law to arrange a telephone consultation before new legislation exposes you to the scrutiny of the TaxMan.