Buried treasure: The use and abuse of tax havens

Update, March 30: Originally scheduled for November, this Mini Law School was postponed. It will now take place on Wednesday, April 4 at 7 p.m.

Tax havens are the modern day equivalent of buried treasure chests: an unknown amount of wealth locked up in an exotic undisclosed location, hidden from view until moved by the owner or otherwise discovered.

But what are the consequences of maintaining or finding foreign accounts in today’s more sophisticated economic and legal system?

Schulich School of Law Professor Geoffrey Loomer hopes to clear up some of the misconceptions about what you can and can’t do with your money offshore during his upcoming Mini Law School lecture: “Buried Treasure: The Use and Abuse of Tax Havens.”

“I’m going to dispel some of the myths about what your legal obligations and rights are under Canadian tax law with respect to having money offshore, and provide some information on how people are using tax havens to either evade tax, which is criminal behaviour, or avoid, mitigate, or reduce their taxes in ways that are legal under Canadian law, but some people might consider improper,” says Prof. Loomer, who specializes in international tax law.

Cracking down on offshore accounts

A tax haven is a jurisdiction with low or no tax on some kinds of income. Well-known tax havens include countries such as the Cayman Islands, Bermuda, Hong Kong, the Channel Islands, Switzerland and Liechtenstein.

Prof. Loomer will talk about recent examples of evasion, and discuss how governments around the world have been increasing their efforts to track down offshore accounts and make evaders come forward and pay their tax.

“For Canadian residents, I’m sorry, there’s not really much you can do to not pay tax in Canada on your worldwide income,” he explains. “But people still try, and the Canadian response since about 2008, along with the rest of the G20, has been to try to crack down on that.”

Much of this has been done, successfully, through a massive expansion of information exchange among countries, including the traditional tax haven holdouts.

While tax law might seem overly technical, Prof. Loomer notes that these issues also have important political and social ramifications, especially in the current climate of the global occupy movements protesting the wealth of the 1 per cent.

“The tax system is designed in part to redistribute wealth from the extremely rich, including large companies and high net-worth individuals. To some extent, the system fails because those are the persons who have access to these methods of either evading or avoiding tax.”