Friday, October 31st8.2°C
23696
23129

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

23015


Recent Trending




Today's Market
S&P TSX14602.74+144.05
S&P CDNX761.98-9.67
DJIA17367.78172.36
Nasdaq4623.617+57.479
S&P 5002014.62+19.97
CDN Dollar0.8862-0.0072
Gold1165.50-33.10
Oil79.69-1.21
Lumber323.10-0.50
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.115+0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.16+0.01
Cantex0.045-0.015
Anavex Life Sciences0.165-0.0061
Metalex Ventures0.03-0.005
Russel Metals32.60+0.38
Copper Mountain Mining2.03+0.06
Colorado Resources0.14+0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.375+0.005

 



23511

FEATURED Property
2097613#22 2395 Pleasant Valley Rd.
4 bedrooms 3 baths
$259,800
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22632