Offshore Tax Havens Increasingly Popular With Canadians
Published on 16 March 2005
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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.
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