Tag: Panama Papers
With a list that includes a dozen current and former world leaders, over a hundred politicians and public officials, as well as many celebrities and professional athletes, the recently leaked Panama Papers have caused quite a stir as they threaten to reveal how many people use banks, law firms, and offshore shell companies to hide assets and evade regulatory oversight or tax obligations.
Beginning in 2015, an anonymous source made 11.5 million records from Panama-based law firm Mossack Fonseca available to the German newspaper Süddeutsche Zeitung (“SZ”). These documents reveal information surrounding the ownership of offshore bank accounts and companies. As a result of the volume of documents, SZ turned to the non-profit organization, The International Consortium of Investigative Journalists (“ICIJ”), to assist with distribution. The first reports were released in early April of this year and the ICIJ has stated that they plan to publish the full list by early May 2016.
Although it is not illegal to have an offshore account (and there are many legitimate reasons why one might have one), they are often associated with attempts to hide assets or to disguise ownership of assets. For those who use offshore accounts for these improper purposes, failure to disclose certain assets can result in tax on unreported income, penalties, and arrears interest.
As the May 2016 release date approaches, many Canadians are considering the benefits of the Voluntary Disclosure Program offered by the Canada Revenue Agency (“CRA”). In the United States, the Internal Revenue Service (“IRS”) is going so far as to encourage any U.S citizens and companies who may be involved to come forward now and participate in their own Voluntary Disclosure Program.
For an Estate Trustee concerned with the possibility that a deceased (whose estate he or she is administering) may have been implicated, this program provides an opportunity that allows a taxpayer (or Estate Trustee) to come forward and voluntarily correct any errors or omissions without being subject to the penalties (or prosecution) that might normally apply. However, among other requirements, it is essential that disclosure be made voluntarily which requires that it be made prior to becoming aware of any compliance actions being taken.
For more information on the Voluntary Disclosure Program and Estate Trustee liability, please see our previous blog post on the subject here.
Thank you for reading.