Canada Cracking Down on Swiss Accounts

October 1, 2010 International Tax CooperationOffshore BankingTaxation in Canada

The Plaque of the Hong Kong and Shanghai BankCanadian and French tax authorities are cooperating in an investigation into potentially undeclared offshore accounts held by Canadians in the Swiss division of the HSBC bank.

On September 30th Keith Ashfield, Canadian Minister of National Revenue, revealed that the Canada Revenue Agency (CRA) has received extensive information regarding national taxpayers with offshore accounts held with the Swiss division of the Hong Kong and Shanghai Banking Corporation (HSBC). This data contains details regarding approximately 1 800 accounts linked to Canadian taxpayers. The CRA has already launched audits into the largest accounts, to determine whether the holder has fully complied with national tax law. Keith Ashfield added that all information connected to Canadian nationals will also be investigated in the very near future. Canadian authorities have not revealed the amount of capital held within these bank accounts, although previous comments from the French Government indicate that each account required start-up deposits of approximately CAD 500 thousand (approx. USD 486.5 thousand).

The data received by the Canadian authorities is part of a larger list of HSBC clients, acquired earlier by French tax authorities. The list was allegedly stolen from the bank in 2007 by Hervé Falciani, a former IT employee with the HSBC. The incident caused immediate political strife between Swiss and French authorities. However, an agreement has now been reached whereby the French Government can pass the data onto other Governments, but Swiss authorities will render no assistance in prosecuting individuals listed on the stolen information.

Canada has already set a precedent of utilizing stolen banking data to catch tax evaders. In the last two years extensive investigations were held into information stolen from the Liechtenstein based financial institution LGT Group. Speaking about the latest case and Canada’s previous use of stolen data, Keith Ashfield said: “This is just another example of how our government is taking action to crack down on people who unfairly exploit offshore accounts…We know that most Canadians pay their taxes and play by the rules. That’s why we are taking aggressive action to recover money owed to Canadians.” He added that in order to carry on with prosecution of tax evaders, the CRA will, in the foreseeable future, continue similar international data-exchange collaborations with the Organization for Economic Co-operation and Development, the Seven-Country Working Group on Tax Havens, and the Joint International Tax Shelter Information Centre.

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