Canadians must report all income whether earned offshore or onshore. This is because the law is deeming income as Canada’s public money. Since such income is not yours, you have a fiduciary duty to report all of it, and on time. Where you are while earning public money for Canada is irrelevant. This position is discussed in Apu’s Theory (Chapter 17).
Canada’s Income Tax Act (“ITA”) does not define the word “income”. The Government’s explanation is the ITA applies to all income. This is true. What the Government does not want to be exposing is the income’s status can be your private property or be Canada’s “public money”1.
The Canadian Scene (1957), is a study guide for immigrants becoming Canadians citizens. It lists one of the basic rights as having Freedom of Private Property2. (Click here to view a scan of the pages (5 MB)). Taxing private property is diminishing your private property rights. That is why Apu’s Theory concludes income tax is not on your private property, but is on Canada’s public money. Taxing public money means there is no violation to Freedom of Private Property. This is how and why Canadian income tax is legal.
Discover Canada (2012)3 is the current study guide for immigrants becoming Canadian citizens. It no longer mentions Canadians having Freedom of Private Property. However, it still exists as Canada’s legal system (outside Quebec) uses common law principles. Why did the Government remove private property rights from their current study guide?
The ITA deems Canadian’s income as Canada’s public money. The deeming stands if you do not report the status of the income. This is why it is extremely important to not only report all your income, but also the status of the income. This is also why CRA makes all Canadians report all their income. Canadians then have a chance to rebut any deeming the law makes. Most Canadians would not think CRA is doing them a favour by making them file, but they are.
Private persons earn private property. However, if a private person chooses representing the ITA office as an ITA officer, then the officer receives income as public money for Canada. Law professor Peter Boyce says the office and the officer are “conceptually divisible but legally indivisible.”4 In other words, the officer’s income legally belongs to Canada as her public money. Both incomes are legally indivisible.
Since the ITA deems Canadians are earning public money as ITA officers, it is irrelevant where such officers earn it. The public money still belongs to Canada. ITA officers must pay a fee5 , an income tax, for using such an office.
Since Canada’s public money is not yours, ITA officers have a fiduciary duty to report such public money accurately and on time. You are committing tax evasion and fraud against the public purse if all public money is not reported. The Consolidated Revenue Fund is another name for the public purse.
Apu’s Theory offers a plausible theory why Canadians must report all income, whether earned in Canada, offshore, or anywhere in the world. It also corroborates Apu’s Theory as a plausible explanation of how Canada’s income tax really works.