Offshore tax havens increasingly popular with Canadians
As the average Canadian household’s net income has increased by an average of 17% over the last three to four years, fuelled in part by steady increases in real estate equity, so the value of financial assets placed offshore by Canadians has significantly increased.
In fact, between 1990 and 2003 the amount of Canadian assets held offshore has increased by a staggering 700%. It seems that as word spreads about offshore tax havens, their accessibility, security and obvious financial benefits, so confidence in the offshore world has increased.
Statistics Canada, the company responsible for collating these figures, further reported that the increase in Canadian assets held offshore had risen from 11 billion dollars in 1990 to 88 billion dollars by 2003. There is no denying the fact therefore that offshore tax havens are becoming increasingly popular for Canadian assets!
The tax havens favoured by Canadians are fairly typical and include Barbados, Bermuda, the Cayman Islands and the Bahamas with Switzerland and Ireland also growing in popularity. Switzerland has an image as a first class offshore haven, this combined with the sophistication and security of its offshore banking structures and the privacy it affords its investors has led to its increase in popularity. Ireland on the other hand has cleverly structured and positioned itself as a haven on the fringes of both Europe and the offshore world and offers foreign investors significant tax benefits, privacy guarantees and interesting investment opportunities.
The amount of money being placed offshore by Canadians is in direct contrast to the amount of direct finance being invested in the US by Canadians...this has seen a significant decline over the same period. And when you consider that the figures presented by Statistics Canada relate only to the amounts placed offshore by Canadian companies, the true figures would be far higher if personal offshore assets were also taken into account.
The move offshore has been strong, sharp and significant. And it is not only the US that has suffered from investment decline as a seemingly direct result of the increased use of tax havens. While Canadian direct investment offshore annually is now averaging 18% so direct investment in the US has dropped to 8%, and investment across all other non-tax haven countries has dropped and now only adds up to 14%.
The largest proportion of assets held in tax havens belonged to companies in the financial sector, which is unsurprising as these are companies who are completely up to date with legislation and opportunities across the financial market place...they are also the companies best placed to understand and take advantage of offshore opportunities as they present themselves. Where they invest, so other market sectors and then private individuals will follow.
Those responsible for collating the figures were unable to draw definitive conclusions from the overall statistics, but I think it’s fair to say that offshore tax havens are becoming increasingly attractive across the board. After all it’s not only Canadians who are moving more wealth and assets offshore; the whole world is awakening to the fact that as personal privacy and asset security are no longer guaranteed onshore due to the fact that the world has grown increasingly litigious and our governments have grown increasingly paranoid and greedy in equal measures, we are responsible for securing our own financial future security. And where the legitimate use of offshore tax havens for personal wealth protection is an option, so more of us are taking the options and opportunities as they present themselves to us.
2 Comments:
"Offshore tax havens increasingly popular with Canadians" Should this news surprise anyone?
In the years to come, governments in high-tax countries worldwide will grow increasingly desperate to protect their herds of taxpayers from poaching by lower-tax regimes. They will proceed with increasing savagery against those who have been successful in evading or avoiding taxes.
Remember that its is NOT "your" government! Governments are little more than extortists seizing money from those living on their territory through threat of violence, jail, fines, etc. The state controls us through our jobs and property, both of which are easily monitored and taxed. Government is not, as it pretends, really interested in the artificially-created "crime" of "money-laundering" or even of carrying on the "war on terror."
What really terrifies the state is tax evasion and the domestic underground economy. Enormous social welfare systems have to be maintained, and there is a need to provide food for their voters (most of whom are wage labourers, whose taxes are deducted at source!).
But those of us interested in gaining financial freedom are outnumbered. There are basically two types of people in developed-world economies. One comprises those who earn money and save/invest it well, living frugally but comfortably due to their financial self-control and independence from government.
The other, far more common, type consists largely of wage slaves. Living from paycheck to paycheck, they fritter away their money in an ultimately useless attempt to maintain a standard of living derived from the past.
Thirty or forty years ago, western societies actually DID feature the highest productivity on earth. Now, in the 21st century, many developing countries, undercutting westerners in terms of both actual goods produced AND salaries, are more competitive. Their citizens enjoy rising standards of living. Walk down any street in Canada and count how many businesses actually produce real goods and can sell them at prices the rest of the world will pay. You will see all kinds of service industry: banks, real estate, doctors, dentists, insurance, retailers, gas stations, restaurants.
Canadian (and other western)consumers, desperate to continue purchasing the things they feel they deserve, have slashed their savings rates to zero or sub-zero and are increasingly borrowing money. For the time being, cheap imports have helped hold up the western standard of living. Indeed, it is said that food and clothing are in fact cheaper now than they were twenty years ago! But this cannot go on long. In the face of inflation, taxation and regulation, Canadian real wages keep falling.
This second type of individual is likely to have borrowed money (whether through mortgage or personal loan) for daily necessities or to buy depreciable assets, chief among which are cars, vacations and poor real estate investments. However, the most important characteristic of this latter group is that they are greatly dependent, directly or indirectly, on government. Heavy users of the social safety net, they or members of their families likely work for government, or their employer's business might depend on government purchasing. Moreover, all kinds of businesses, from tax accountants to the makers of VAT/GST-compliant cash registers exist solely because of government requirements.
Citizens of western democracies are famously passive in the face of the state and taxation leviathan. They all believe in "fairness," "tax justice," "paying a fair share," and so on. In Canada, in particular, there is the naively common view that Canadians are uniquely altruistic, liberal and forward-thinking, ethical in their behaviour and live in a caring society where the needs of each are the concern of all. However, each Canadian taxpayer believes that he or she pays a very heavy burden, and that most others are getting away with some form of skimping or cheating.
The only reasons more residents of high-tax jurisdictions don't invest offshore are lack of knowledge and that it is difficult to move money while maintaining one's financial privacy. To avoid government tracking the movement or use of one's personal assets, leave no paper trail. Don't use a domestic bank, and don't even keep the funds you've been saving from your salary in any kind of financial institution! Accumulate them in the closet. Financial institutions are effectively arms of government, required to report virtually all overseas transactions.
Carrying cash overseas on one's person is possible, but a limit of $10,000 exists, beyond which one should report to the tax authorities. New Canadian and Euro higher-denomination bills now carry RFID transmitters, so avoid these. Actual cash must be used at some point in any transaction moving money overseas, and this must be done through a financial institution outside one's home country. Accessing overseas investments must similarly be done gingerly and there must be NO contact between your overseas investment and you, living in your high-tax state.
Intelligent individuals should take their financial future in hand. Be warned.
Mon May 09, 03:57:44 PM NZST
"Offshore tax havens increasingly popular with Canadians" Should this news surprise anyone?
In the years to come, governments in high-tax countries worldwide will grow increasingly desperate to protect their herds of taxpayers from poaching by lower-tax regimes. They will proceed with increasing savagery against those who have been successful in evading or avoiding taxes.
Remember that its is NOT "your" government! Governments are little more than extortists seizing money from those living on their territory through threat of violence, jail, fines, etc. The state controls us through our jobs and property, both of which are easily monitored and taxed. Government is not, as it pretends, really interested in the artificially-created "crime" of "money-laundering" or even of carrying on the "war on terror."
What really terrifies the state is tax evasion and the domestic underground economy. Enormous social welfare systems have to be maintained, and there is a need to provide food for their voters (most of whom are wage labourers, whose taxes are deducted at source!).
But those of us interested in gaining financial freedom are outnumbered. There are basically two types of people in developed-world economies. One comprises those who earn money and save/invest it well, living frugally but comfortably due to their financial self-control and independence from government.
The other, far more common, type consists largely of wage slaves. Living from paycheck to paycheck, they fritter away their money in an ultimately useless attempt to maintain a standard of living derived from the past.
Thirty or forty years ago, western societies actually DID feature the highest productivity on earth. Now, in the 21st century, many developing countries, undercutting westerners in terms of both actual goods produced AND salaries, are more competitive. Their citizens enjoy rising standards of living. Walk down any street in Canada and count how many businesses actually produce real goods and can sell them at prices the rest of the world will pay. You will see all kinds of service industry: banks, real estate, doctors, dentists, insurance, retailers, gas stations, restaurants.
Canadian (and other western)consumers, desperate to continue purchasing the things they feel they deserve, have slashed their savings rates to zero or sub-zero and are increasingly borrowing money. For the time being, cheap imports have helped hold up the western standard of living. Indeed, it is said that food and clothing are in fact cheaper now than they were twenty years ago! But this cannot go on long. In the face of inflation, taxation and regulation, Canadian real wages keep falling.
This second type of individual is likely to have borrowed money (whether through mortgage or personal loan) for daily necessities or to buy depreciable assets, chief among which are cars, vacations and poor real estate investments. However, the most important characteristic of this latter group is that they are greatly dependent, directly or indirectly, on government. Heavy users of the social safety net, they or members of their families likely work for government, or their employer's business might depend on government purchasing. Moreover, all kinds of businesses, from tax accountants to the makers of VAT/GST-compliant cash registers exist solely because of government requirements.
Citizens of western democracies are famously passive in the face of the state and taxation leviathan. They all believe in "fairness," "tax justice," "paying a fair share," and so on. In Canada, in particular, there is the naively common view that Canadians are uniquely altruistic, liberal and forward-thinking, ethical in their behaviour and live in a caring society where the needs of each are the concern of all. However, each Canadian taxpayer believes that he or she pays a very heavy burden, and that most others are getting away with some form of skimping or cheating.
The only reasons more residents of high-tax jurisdictions don't invest offshore are lack of knowledge and that it is difficult to move money while maintaining one's financial privacy. To avoid government tracking the movement or use of one's personal assets, leave no paper trail. Don't use a domestic bank, and don't even keep the funds you've been saving from your salary in any kind of financial institution! Accumulate them in the closet. Financial institutions are effectively arms of government, required to report virtually all overseas transactions.
Carrying cash overseas on one's person is possible, but a limit of $10,000 exists, beyond which one should report to the tax authorities. New Canadian and Euro higher-denomination bills now carry RFID transmitters, so avoid these. Actual cash must be used at some point in any transaction moving money overseas, and this must be done through a financial institution outside one's home country. Accessing overseas investments must similarly be done gingerly and there must be NO contact between your overseas investment and you, living in your high-tax state.
Intelligent individuals should take their financial future in hand. Be warned.
Mon May 09, 03:57:49 PM NZST
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