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UNREPORTED FOREIGN INCOME: CRA’S TARGET

Submitted by admin

In recent few years people with unreported foreign income noticed that new methods the CRA has developed to catch them.  The Canada Revenue Agency has maximized enforcement on unreported foreign income to the CRA through its brand new Offshore Tax Informant Program in short OTIP. Mainly the CRA is after taxpayers who own foreign properties.

The CRA wants to know the country in which your property is located.  It wants the name of the bank or any other entity that holds your funds outside of Canada, the identity of foreign companies in which you are a shareholder, the amount owed to you by foreigners and a description any form of asset, including land, which you have outside of Canada. This alone shows how serious the CRA wants to track unreported foreign income to the CRA from tax payers who do international deals.

Surprisingly enough, many Canadians do not understand what must be included in their income for taxation purposes. This knowledge is necessary to avoid facing unreported foreign income to the CRA penalties.

 

You need a tax specialist to determine how your income will be reported to the CRA. The items that are not taxable or included in the taxable unreported foreign income include gift, inheritances, damages paid because of being a victim of a criminal accident, benefits from a deceased life insurance policy holder and Canada Child Benefit Tax Credits and so on.

If you invest non-taxable income the interest rate that you will earn as a result will become taxable unreported foreign income to the CRA.   If unreported foreign income to the CRA is for the previous tax year, the taxpayer should amend the changes. You may be penalized in form of penalties and interest charges as of the date the filing deadline was due. Consult tax specialist will reduce your penalties related to your unreported foreign income.