What does the taxman know?
 

Anyone know if the Canadian taxman has access to private bank accounts? Can he see deposits into the account? Also can he tell via the international tax office if you've worked and earned overseas? All hypothetical of course and if not then I'm enquiring for a friend of a friend!

Re: What does the taxman know?
 

Banks report to the government the interest that they pay you.

You are not taxed on the amount that's in your account (the principle). You're taxed on the interest that your principle earns.

If they are from outside the country, yes.

A plain and simple deposit into your account, comprised of money that you obtained from inside Canada, is not reported to the government, as far as I know.

But the person or organization that gave you the money that you then turned around and deposited into your bank account often does report the payment. For example, if it's an employer who paid you for work that you did for that employer, the employer would report the wages/salary that they paid you.

It depends which country it is and how much information its tax authority shares with the Canadian tax authority.

You'd be unpleasantly surprised at how many countries do share information with Canadian tax authorities.

Escape Artist has some information on this topic.

Re: What does the taxman know?
 

Best thing is to assume that the taxman sees everything and take it from there.

Re: What does the taxman know?
 

Anything around $10,000 is reported to "Fintrac" to monitor money laundering.

The Government do not monitor your accounts (I think), BUT, if you are chosen for an Audit you have to produce all of your Bank, Credit Card etc statements, canceled cheques, (for the last 6 years) and they can and will ask you about individual transactions, especially deposits. Its no good "losing" them as you are presumed guilty and have to prove that you don't owe them any money.

Re: What does the taxman know?
 

Don't tell them about it, I doubt you will get caught and, if you do, you can whine about it non stop to your friends when you are deported :p

Re: What does the taxman know?
 

I don't really care if this is hypothetical or not. Tell your friend of a friend that if they want to come to Canada to enjoy all this country has to offer then they should pay their ******* fair share of taxes.

I'm not going to give you, sorry, the friend of your friend, any assistance to cheat.

Re: What does the taxman know?
 

If you are earning money from outside the country say, maybe from rent from a property back in the uk, or royalties from a book. That could be paid into an offshore account. That is not the business of the canadian tax man.

Am i wrong?

Re: What does the taxman know?
 

There's a question on the tax return worded sth like "Do you/did you own foreign property worth more than 100k CAD during this tax year?"

Re: What does the taxman know?
 

Yes, you are wrong. I quote from the Wiki article on Canadian Taxation:

If you are tax resident in Canada, you pay income tax on your worldwide income. If, after you move to Canada, you have residual income in the UK, such as interest or rental income, then this is taxable in Canada. Income within a registered pension fund is exempt, however.

You generally will be given credit for any UK income taxes paid. Canada has tax treaties with many countries, including the UK, which limits the possibility of double taxation on many types in income.

Re: What does the taxman know?
 

at what rate do you get taxed on those rental income or value of property?

Re: What does the taxman know?
 

You get taxed on the rental income, but not on the value of the property. Or at least Canada does not tax you on the value of foreign property. Canada taxes you on the income that you derive from the foreign property. However, if you've paid tax to a foreign government on the income from the property, tax treaties generally will see to it that you are not taxed twice.

Re: What does the taxman know?
 

AFAIK you would get taxed on the income from the rental property in the same way as if you had rental property in Canada. You would only get taxed on the capital gain if you disposed of the property.

An interesting question would be whether you would be able to claim the tax relief on any mortgage on your investment property abroad as you can for an investment property in Canada. Anyone know the answer to this?

Re: What does the taxman know?
 

Yes. You pay tax on the net profit of your property abroad. This is gross rental income less all expenses incurred to earn that income. The interest on a loan to purchase that property is a legitimate expense.

Re: What does the taxman know?
 

I assume so. It's a legitimate business expense. I'll be shafted if you can't.

Re: What does the taxman know?
 

Here's a question. I'm actually making a small net loss on my property in the UK at the moment (probably about £1,000 per year). I also earn interest on my savings of about £1,000 per year. So on my UK tax return this pretty much balances out. Would I be able to offset them for my Canadian tax return so that I have no net foreign income?

If not, I guess it would make sense to use my savings to pay off a chunk more of the mortgage.