Canada and U.S. Sign Tax Information Sharing Agreement

Canada and the United States agreed to a new tax information sharing agreement which will potentially affect all American citizens living in Canada.

Effective July 1, 2014 Canadian banks and investment institutions will be required to report information regarding Americans with financial accounts held in Canada holding more than $50,000. This requirement relates to the Foreign Account Tax Compliance Act (“FATCA”) which was enacted in 2010 in response to a scandal relating to Americans hiding money offshore in Swiss bank accounts.

For each applicable account held by an American , Canadian banks and investment institutions will have to report the account holder’s name, taxpayer identification number, account number, ending account balance, and any income earned in the account on an annual basis. Banks will submit the information to the CRA which will in turn transmit the information to the IRS. more »

2013 Tax Planning, What Can You Do Now?

Happy New Year 2014.

Yes, it’s a very happy new year for taxman.

Your income is going to be taxed more, starting January 1, 2014. If you are an employee, you will see your net take home income going down a bit, because of increased contribution of CPP and EI.

As I was reading my Daily Newspaper on January 2^nd, I saw a news headline “Now is the best time for Tax Planning” featuring a prominent tax expert. I thought he was referring to 2014 tax planning, now is the best time to plan ahead of how much tax you would like to pay in 2014.

To my surprise, in the article, he was mentioning about tax planning for 2013. He must have a time machine, to plan for 2013 taxes after January 2^nd, 2014. more »

Your Privacy is at Risk with Canada Revenue Agency

Is your privacy is at risk with CRA?

It depends. CRA has the most confidential personal and financial information about you, sometime even your spouse does not know. With proper authentication these information can be obtained by anyone in the CRA or outside of the CRA. You always risk your privacy, trying to save money by doing your annual income tax return with one of those mushrooms like tax service provider that pops up during tax time. If they have an alternative agenda, your personal information is more valuable to them than your tax service fees.

CRA employees have been accused of accessing unauthorized taxpayer information by the Office of the Privacy Commissioner of Canada (OPCC).

Canada’s privacy watchdog Office of the Privacy Commissioner of Canada (OPCC) Commissioner Jennifer Stoddart in her annual report stated that Canadians complaints over privacy concerns have reached a record-high in 2012. more »

Thousands of US Citizens Have Not Reported Their Canadian Income – IRS

US Internal Revenue Service (IRS) released statistics on the number of tax returns it received in 2010 from US citizens with foreign trusts. In all of Canada only 324 returns were filed that report ownership in a non-US trust, which likely means hundreds of thousands of US citizens residing in Canada had not filed the appropriate returns.  This is important for two reasons:
first, the steep penalties for not filing tax returns and
second, last week the US Government Accountability Office (GAO) issued a report that encouraged IRS to pursue those taxpayers who file late returns using a technique known as “quiet disclosure.” more »