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Crunch time for tax filers is still weeks away, but Canada Revenue Agency can already boast that it has unearthed six times more offshore income, $600-million, this year than last thanks to a wave of international whistleblowers and the agency's willingness to piggyback on a beefed-up campaign in the United States.
With the end of the fiscal year only a month away, the agency has announced that it has received 3,600 voluntary disclosures - the amnesty program that allows taxpayers to report hidden wealth to avoid prosecution - that detail offshore holdings. In the previous fiscal year, there were about 1,900 such disclosures, revealing less than $100-million.
"The government has been doing a good job of scaring people. There's a fear factor - people want to be able to sleep at night," said Robert Kepes, a Toronto tax lawyer, who explained that he would never have predicted the number of clients who have inquired this year about how to file disclosures.
And the total amount already uncovered through the program will likely increase considerably, CRA has said. Federal auditors still have about 800 disclosures to sift through, and approve or disapprove, before the final tally is in.
The steep spike in disclosures also comes amid new headlines in Europe, where yet another bank insider - an IT employee with a Swiss office of HSBC - has reportedly handed over to the French authorities information on 24,000 accounts. Back in January, when rumblings of the HSBC data theft were percolating but the actual number of accounts was still a mystery, the then Minister of Revenue, Jean-Pierre Blackburn, announced that France had agreed to hand over information on Canadians buried in the list. CRA has since confirmed that there are Canadians on the list, but has refused to disclose how many or if any audits have been launched.
In the past year, European countries with strict banking secrecy laws and low tax rates have suffered repeated blows because of employees stealing internal records and offering them up to other governments facing large deficits. The European principality of Liechtenstein, population 30,000, is still reeling after a tech worker at a division of one of its largest banks, the LGT Group, sold information on suspected tax evaders to the German authorities - data that was then distributed to tax agencies around the world, including Canada.
The U.S. Department of Justice also contributed to Canada's haul when it targeted Swiss financial giant UBS. The U.S. investigation into UBS revealed that Swiss-based bankers, not licensed to conduct business in the United States, were travelling to large American cities and helping well-to-do clients store billions of dollars in "undeclared" accounts. To avoid prosecution, the bank signed an agreement to hand over the names of thousands of clients - an exchange of information that has been temporarily held up because of a recent Swiss court decision.
Canada Revenue Agency has said it is in discussions with UBS for access to the names of its Canadian clients with Swiss accounts, a group that is estimated to collectively hold at least $5.6-billion in the vaults of Geneva and Zurich. CRA declined to explain the status of its ongoing negotiations.
Caitlin Workman, a spokesperson for CRA, said there is much more to the agency's voluntary disclosure program than recovering taxes owed.
"More importantly - it's intelligence," she said. "We learn from the information that people provide. If it's people that are avoiding taxes, it can give us information on the schemes they're using."