Friday, March 6th1.0°C
25326
24506

Canada-U.S. tax information sharing deal open to abuse: privacy commissioner

OTTAWA - Canada's privacy watchdog is urging the federal government to protect the personal information of Canadians affected by a new tax-information sharing agreement with Washington.

Interim privacy commissioner Chantal Bernier says a controversial bilateral agreement to comply with new U.S. tax legislation could give American authorities too much financial information about Canadian dual citizens.

The Foreign Account Tax Compliance Act, which targets U.S. taxpayers with international accounts, would require even dual citizens who live in Canada and have no financial footprint south of the border to file returns with the U.S. Internal Revenue Service or face penalties.

A House of Commons committee is studying an agreement between Ottawa and Washington, part of the federal government's omnibus budget bill, that would require banks to report accounts held by "U.S. persons" to the Canada Revenue Agency, which would then notify the IRS.

There is potential for abuse, Bernier told the committee. She called on the federal government to notify banks exactly what kind of information is necessary, and ensure "appropriate technological" controls are put in place.

"The risk to privacy is mainly related to over-collection, over-reporting and security," Bernier said.

But John Richardson, a Toronto lawyer who advises Canadians on the implications of the U.S. law, said the agreement represents a nightmarish situation for about one million Canadians, many of whom don't even realize they are considered "U.S. persons" by the IRS.

"This a life-altering, monumental event for them," Richardson said. "The most frightening question for many of these people is, 'Are you now or have you ever been a U.S. citizen?'"

Richardson said the government should refuse to co-operate with the U.S., which — unlike most other developed countries — levies income taxes based on citizenship rather than residency.

But officials from the Canadian Bankers Association and the Canadian Council of Chief Executives urged the MPs to pass the provision, saying the penalty to Canadian financial institutions would be prohibitive.

Washington has threatened Canadian banks and other financial institutions that operate in the U.S. with a 30 per cent withholding tax if they fail to comply.

"The implications on non-compliance would be astronomical," said Darren Hannah, the association's director of banking.

"Canadian foreign direct investment in the U.S. is right now $318 billion, U.S. source income flowing back to Canada from the U.S. is $42 billion every year — imagine subjecting that to a 30 per cent withholding tax."

The Canada-U.S. agreement will allow banks to pass on information to the Canada Revenue Agency, rather than the IRS directly, Hannah said. It also does not force banks to pry into the backgrounds of Canadians unless they have reason to believe they are also U.S. citizens, he added.

Liberal MP Scott Brison said Canada could have secured a better arrangement had Prime Minister Stephen Harper made more of an effort to establish a closer relationship with U.S. President Barack Obama.

"The (agreement) gets Canadian banks off the hook for reporting, it does not get Canadian citizens off the hook," Brison said.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX15076.32-26.79
S&P CDNX693.54-3.38
DJIA18012.87-122.85
Nasdaq4970.997-11.813
S&P 5002089.24-11.80
CDN Dollar0.7940-0.0071
Gold1174.60-21.30
Oil52.18-0.37
Lumber286.40-0.60
Natural Gas2.815-0.026

 
Okanagan Companies
Pacific Safety0.13-0.005
Knighthawk0.010.00
QHR Technologies Inc1.64-0.01
Cantex0.035-0.005
Anavex Life Sciences0.18-0.004
Metalex Ventures0.045+0.005
Russel Metals24.33+0.06
Copper Mountain Mining1.20-0.04
Colorado Resources0.130.00
ReliaBrand Inc0.0065-0.0015
Sunrise Resources Ltd0.045-0.005
Mission Ready Services0.22-0.005

 



24353

FEATURED Property
2199294#104 709 Houghton road
2 bedrooms 2 baths
$204,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


How to price: Step Four

In 2008 Self Counsel Press published my book - Pricing Strategies for Small Business. The purpose of the book was to make available to the owners of small companies, pricing techniques used by sophist...


Refinance your mortgage?

Canadian Mortgage rates are low and could be dropping down in time for the spring market following a drop in the Bank of Canada Rate on January 21 by 1/4% which will save new buyers and those with mo...


Creating your retirement vision

A vision means different things to different people. To the head of a large corporation, it’s the ability to chart a course that will deliver success (think Steve Jobs and Apple), to a shaman, i...

_








Member of BC Press Council


25413