Taxpayers who use tax havens to hide assets or avoid taxes should know that the CRA is working with international partners to address tax avoidance and evasion, the tax authority explained.

It revealed that: "Specially trained auditors and tax avoidance officers are focused on aggressive international tax planning, including the abusive use of tax havens, to ensure that Canadians are accurately reporting their income and paying tax."

It continued: "Not reporting taxable income from foreign sources is illegal. If unreported income is found as a result of a review or an audit, you will have to pay the taxes owed plus interest and penalties."

"If the CRA determines that you failed to report income in an attempt to evade taxes, you could face criminal charges that may result in court imposed fines or jail time."

In addition to having to report all income from both inside and outside Canada, when completing income tax returns, individuals will be asked if they have foreign property with a total cost of more than CDN100,000. Penalties are imposed if the statement is not filed, or is not filed on time.

The CRA went on to stress that it has a Voluntary Disclosures Program available to taxpayers who want to correct their tax affairs before any audit actions or investigations are launched.

If a full disclosure is made before the CRA begins any compliance action, only the taxes owing plus interest may have to be paid, and no other penalties or prosecutions will be made.