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Nigel, author / editor of the World Money laundering Report
www.vortexcentrum.com/vcl04.htm to subscribe has sent ME a
warning about the answer to this question. His reply is below
and points out the dangers inherent now in the movement of money.
I point out that my suggestion to deposit to a US bank account
was not to avoid the reporting of any transactions. I knew the
transaction would be reported to the US authorities. When more
than $10,000 is deposited into a US bank account from a foreign
source, the US bank automatically fills out a US Treasury form
4789. Nigel's comments that depositing into the US account where
it will be reported to avoid Canadian reporting is a real warning
to me and I will be following up with Tom Hansen from Canada's
FINTRAC to find out the answer. US form 4789 can be found at:
http://www.irs.gov/pub/irs-fill/f4789.pdf Note that this is a
June, 1998 form and has existed for years. It has nothing to do
with Sept 11, 2001
If you were to take more than $10,000 of cash and or negotiable
instruments across the US border, "YOU" have always had to report
it to the US authorities on form 4790:
http://www.irs.gov/pub/irs-fill/f4790.pdf The last revision for
this form was in April 2000 so it also has nothing to do with
Sept 11, 2001.
Note that the penalties for failure to fill out and hand in form
4790 are up to $500,000 US PLUS 5 years in jail AND the
forfeiture of the money.
CANADA
I met Nigel Morris-Cotteril at a World Money Laundering
conference in Vancouver in Oct, 2000 and at that time, we already
knew that Canada was bringing in money laundering legislation and
the $10,000 across the border has now taken effect in Canada
along with many other anti money laundering rules. For instance,
as an accountant AND as a realtor, I am required to report
suspicious cash transactions. Lawyers were required to report
but have a temporary suspension while they try and rewrite the
legislation to make them exempt.
Canada has now enacted its own regulations. You can find out
more by going to:
http://www.ccra-adrc.gc.ca/E/pub/cp/rc4321/rc4321-03e.pdf
Note that if you are reporting your own money, you fill out form
E677:
http://www.ccra-adrc.gc.ca/E/pbg/cf/e677/e677-fill-02b.pdf
If you are reporting money sent to someone else or a financial
institution fill in form E667:
http://www.ccra-adrc.gc.ca/E/pbg/cf/e667/e667-fill-02b.pdf
The reason that I suggested the US account was not to avoid
reporting or even avoid income tax. It was to stop (in advance)
the likelihood of the CCRA wanting to know about the money as
taxable income in 2004. Nigel's comment that it might just as
well stay in the Grand Caymans is equally effective.
Please note that any interest earned on the accounts in the
Cayman Islands or the United States or anywhere else in the world
is taxable in Canada from the moment that the questioner arrives
back in Canada.
Nigel's appropriate warning follows in red and we all have to
take it into account if we are doing cross border transactions
with any country or dealing with the public as a financial person
or a realtor. The Canadian penalties are also immense including
jail and money.
david ingram
-----Original Message-----
From: Nigel Morris-Cotterill
[mailto:[email protected]]
Sent: Sunday, January 11, 2004 7:04 PM
To: [email protected]
Subject: Re: [inbox] Cayman Island pension to be
received
by a Victoria, BC,Canada Resident
Actually, you are getting dangerously close to recommending
something
illegal.
This is complicated so stick with it until the end:
Under US law it is an offence to "structure" transactions with
the intent to
avoid cash transaction reporting (CTR).
The payment into a US bank from a foreign bank will be reported
to FinCEN if
it is more than USD 10,000 so banking it there will not be
avoiding CTR in
the USA.
However, if the intention is to avoid CTR in Canada, then *if
taking steps
to avoid CTR in Canada is also an offence*, then there is what is
called
"commonality of offence."
That means that a money laundering offence in one country which
is also an
offence in another can result in a prosecution or asset related
provisions.
It is possible that the USA CTR would trigger an IRS
investigation which
they see as potentially criminal and use the asset seizure and
forfeiture
provisions in US law to freeze or confiscate the assets.
If that happens, and it happens without trial, it is for the
depositor to
prove that the funds were not connected with an offence. If
(again, that IF)
structuring is an offence in both the USA and Canada, then he
will have a
hard time proving that there was no intention to avoid Canada's
CTR
reporting unless he can show a demonstrable good reason for
banking the
money offshore Canada.
Another idea: why not simply leave it in his bank account in the
Caymans if
the funds are completely free of liability and declare them on
his next tax
return so avoiding any risk?
N
----- Original Message -----
From: [email protected]
To: CENTAPEDE
Sent: Monday, January 12, 2004 9:14 AM
Subject: [inbox] Cayman Island pension to be
received by a
Victoria, BC,Canada Resident
QUESTION:
I have been living in the Cayman Islands for 3 years as a non
resident of
Canada.
am moving back march 31, 2004 and will be mailed my Cayman
pension refund
once i arrive in Canada as that is the Cayman policy it will be
in US
dollars. this money was earned while a non resident of Canada but
once i
become a resident again is when i am actually receiving the
money via mail
( check probably) What are my tax implications. also do you have
a Victoria
office or if i use you for tax help from Victoria we could
courier i guess.
thanks AXXXXXXXXXX
=======================================================
david ingram replies:
Our danger is not the Cayman Island Pension. If you were truly a
non-resident, it will not be taxable in Canada as it represents
money earned
out of the country.
However, you might want to deposit in the US so that it never
does come
directly into Canada and avoid banking questions. An MV Cohoe
ride to Port
Angeles would solve that problem. Note that I am not suggesting
anything
even remotely illegal. I am only suggesting it so that the
Canadian Banking
system does not trigger a question mark which you end up having
to explain.
The danger is that the CCRA will try and make you a retroactive
resident
because you kept a car or credit cards or a driver;s licence back
in Canada.
Goto www.centa.com and read the US/Canada taxation section and
read the
Dennis Lee Case and Judge Teskey's ruling. In this case, Judge
Teskey ruled
that Dennis Lee, a Brit, was taxable even though he was not
allowed into
Canada but wanted to come and had married a Canadian. (read it
for the
juicy details).
We can look after you by fax, phone, email, snailmail or courier.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321
[email protected]
www.centa.com www.david-ingram.com
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and all non-contractual duties are expressly denied. All readers
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