Budget Implementation Act, 2016, No. 2 (S.C. 2016, c. 12)
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Assented to 2016-12-15
PART 1Amendments to the Income Tax Act and to Related Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
70 (1) Paragraph 265(2)(c) of the Act is replaced by the following:
(c) for new individual accounts, other than accounts described in paragraph A of section III of Annex I to the agreement, the procedures described in paragraph B of section III of Annex I to the agreement;
(2) Paragraph 265(3)(b) of the Act is replaced by the following:
(b) if the account is a new individual account described in paragraph A of section III of Annex I to the agreement, the procedures described in paragraph B of section III of Annex I to the agreement;
(3) Subsections (1) and (2) come into force on July 1, 2017.
71 (1) The Act is amended by adding the following after Part XVIII:
Part XIXCommon Reporting Standard
Marginal note:Definitions
270 (1) The following definitions apply in this Part.
- account holder
account holder means
(a) the person listed or identified as the holder of a financial account by the financial institution that maintains the account, other than a person (other than a financial institution) holding a financial account for the benefit of, or on behalf of, another person as agent, custodian, nominee, signatory, investment advisor or intermediary; and
(b) in the case of a cash value insurance contract or an annuity contract,
(i) any person entitled to access the cash value or change the beneficiary,
(ii) if no person can access the cash value or change the beneficiary,
(iii) upon maturity of the cash value insurance contract or annuity contract, each person entitled to receive a payment under the contract. (titulaire de compte)
- active NFE
active NFE means, at any time, a non-financial entity that meets any of the following criteria:
(a) less than 50% of the NFE’s gross income for the preceding fiscal period is passive income and less than 50% of the assets held by the NFE during the preceding fiscal period are assets that produce or are held for the production of passive income;
(b) either
(c) the NFE is
(d) both
(i) all or substantially all of the activities of the NFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more of its subsidiaries that engage in trades or businesses other than the business of a financial institution, and
(ii) the NFE does not function as (and is not represented or promoted to the public as) an investment fund, including
(e) the NFE
(f) the NFE has not been a financial institution in any of the past five years and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a financial institution;
(g) the NFE primarily engages in financing and hedging transactions with, or for, related entities that are not financial institutions, and does not provide financing or hedging services to any entity that is not a related entity, provided that the group of those related entities is primarily engaged in a business other than that of a financial institution; and
(h) the NFE meets all of the following requirements:
(i) it
(A) is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic or educational purposes, or
(B) is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labour organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare,
(ii) it is exempt from income tax in its jurisdiction of residence,
(iii) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets,
(iv) the applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable entity other than pursuant to the conduct of the NFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased, and
(v) the applicable laws of the NFE’s jurisdiction of residence or the NFE’s formation documents require that, upon the NFE’s liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organization, or escheat to the government of the NFE’s jurisdiction of residence or any political subdivision thereof. (ENF active)
- annuity contract
annuity contract means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals and includes a contract
- anti-money laundering and know your customer procedures
anti-money laundering and know your customer procedures or AML/KYC procedures means the record keeping, verification of identity, reporting of suspicious transactions and registration requirements required of a reporting financial institution under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. (procédures de connaissance de la clientèle et de lutte contre le blanchiment d’argent ou procédures AML/KYC)
- broad participation retirement fund
broad participation retirement fund means a fund that is established to provide retirement, disability or death benefits to beneficiaries that are current or former employees (or persons designated by those employees) of one or more employers in consideration for services rendered, if the fund
(a) does not have a single beneficiary with a right to more than 5% of the fund’s assets;
(b) is subject to government regulation and provides information reporting to the Minister; and
(c) satisfies at least one of the following requirements:
(i) the fund is generally exempt from tax on investment income, or taxation of investment income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan,
(ii) the fund receives at least 50% of its total contributions (other than transfers of assets from broad participation retirement funds, narrow participation retirement funds or from retirement and pension accounts described in paragraph (a) of the definition excluded account) from the sponsoring employers,
(iii) distributions or withdrawals from the fund are
(A) allowed only upon the occurrence of specified events related to retirement, disability or death (except rollover distributions to broad participation retirement funds, narrow participation retirement funds and pension funds of a governmental entity, international organization or central bank or retirement and pension accounts described in paragraph (a) of the definition excluded account), or
(B) subject to penalties if they are made before such specified events, and
(iv) contributions (other than permitted make-up contributions) by an employee to the fund
- Canadian financial institution
Canadian financial institution means a financial institution that is
- cash value
cash value, in respect of a contract held by a policyholder, means the greater of the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan) and the amount the policyholder can borrow under or with regard to the contract, but does not include an amount payable under an insurance contract
(a) solely by reason of the death of an individual insured under a life insurance contract;
(b) as a personal injury or sickness benefit, or other benefit, providing indemnification of an economic loss incurred upon the occurrence of an event insured against;
(c) as a refund of a previously paid premium (less any cost of insurance charges whether or not actually imposed) under an insurance contract (other than an investment-linked life insurance or annuity contract) due to the cancellation or termination of the contract, a decrease in risk exposure during the effective period of the contract or arising from the correction of a posting or similar error with regard to the premium for the contract;
(d) as a policyholder dividend (other than a termination dividend) if the dividend relates to an insurance contract under which the only benefits payable are described in paragraph (b); or
(e) as a return of an advance premium or premium deposit for an insurance contract for which the premium is payable at least annually, if the amount of the advance premium or premium deposit does not exceed the next annual premium that will be payable under the contract. (valeur de rachat)
- cash value insurance contract
cash value insurance contract means an insurance contract (other than an indemnity reinsurance contract between two insurance companies) that has a cash value. (contrat d’assurance avec valeur de rachat)
- central bank
central bank means an institution that is, by law or government sanction, the principal authority, other than the government of the jurisdiction itself, issuing instruments intended to circulate as currency and may include an instrumentality that is separate from the government of the jurisdiction, whether or not owned in whole or in part by the jurisdiction. (banque centrale)
- controlling persons
controlling persons, in respect of an entity, means the natural persons who exercise control over the entity (interpreted in a manner consistent with the Financial Action Task Force Recommendations — International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation, adopted in February 2012 and as amended from time to time) and includes
(a) in the case of a trust,
(i) its settlors,
(ii) its trustees,
(iii) its protectors (if any),
(iv) its beneficiaries (for this purpose, a discretionary beneficiary of a trust will only be considered a beneficiary of the trust in a calendar year if a distribution has been paid or made payable to the discretionary beneficiary in the calendar year), and
(v) any other natural persons exercising ultimate effective control over the trust; and
(b) in the case of a legal arrangement other than a trust, persons in equivalent or similar positions to those described in paragraph (a). (personnes détenant le contrôle)
- custodial account
custodial account means an account (other than an insurance contract or annuity contract) that holds one or more financial assets for the benefit of another person. (compte de dépositaire)
- custodial institution
custodial institution means an entity, if the entity’s gross income attributable to the holding of financial assets for the account of others and related financial services equals or exceeds 20% of the entity’s gross income during the shorter of
- depository account
depository account includes
(a) any commercial, chequing, savings, time or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness or other similar instrument maintained by a financial institution in the ordinary course of a banking or similar business; and
(b) an amount held by an insurance company under a guaranteed investment contract or similar agreement to pay or credit interest on the contract. (compte de dépôt)
- depository institution
depository institution means any entity that accepts deposits in the ordinary course of a banking or similar business. (établissement de dépôt)
- documentary evidence
documentary evidence includes
(a) a certificate of residence issued by an authorized government body (such as a government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a resident;
(b) with respect to an individual (other than a trust), any valid identification issued by an authorized government body that includes the individual’s name and is typically used for identification purposes;
(c) with respect to an entity, any official documentation issued by an authorized government body that includes the name of the entity and either the address of its principal office in the jurisdiction in which it claims to be resident or the jurisdiction in which the entity was incorporated or organized; and
(d) any audited financial statement, third-party credit report, bankruptcy filing or securities regulator’s report. (preuve documentaire)
- entity
entity means a person (other than a natural person) or a legal arrangement, such as a corporation, partnership, trust or foundation. (entité)
- equity or debt interest
equity or debt interest includes, in the case of a partnership that is a financial institution, either a capital or profits interest in the partnership. (titre de participation ou d’intérêt)
- established securities market
established securities market means an exchange that
(a) is officially recognized and supervised by a governmental authority in which the market is located; and
(b) has an annual value of shares traded on the exchange (or a predecessor exchange) exceeding one billion USD during each of the three calendar years immediately preceding the calendar year in which the determination is being made. For this purpose, if an exchange has more than one tier of market level on which stock may be separately listed or traded, each of those tiers must be treated as a separate exchange. (marché boursier réglementé)
- excluded account
excluded account means
(a) a retirement or pension account that satisfies the following requirements:
(i) the account is
(ii) the account is tax-favoured in that
(A) contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or
(B) taxation of investment income within the account is deferred or investment income within the account is taxed at a reduced rate,
(iii) information reporting to the Minister is required with respect to the account,
(iv) withdrawals are
(v) after applying the rules in subsection 277(3) to all similar accounts, annual contributions to the account are limited to 50,000 USD or less or there is a maximum lifetime contribution limit to the account of 1,000,000 USD or less (and an account that otherwise satisfies this requirement will not fail to satisfy this requirement solely because the account may receive assets or funds transferred from one or more accounts that meet the requirements of this paragraph or paragraph (b) or from one or more broad participation retirement funds, narrow participation retirement funds or pension funds of a governmental entity, international organization or central bank);
(b) an account that satisfies the following requirements:
(i) the account is
(ii) the account is tax-favoured in that
(A) contributions to the account that would otherwise be subject to tax are deductible or excluded from the gross income of the account holder or taxed at a reduced rate, or
(B) taxation of investment income within the account is deferred or investment income within the account is taxed at a reduced rate,
(iii) withdrawals are
(iv) annual contributions are, after applying the rules in subsection 277(3) to all similar accounts, limited to 50,000 USD or less (and an account that otherwise satisfies this requirement will not fail to satisfy this requirement solely because the account may receive assets or funds transferred from one or more accounts that meet the requirements of paragraph (a) or this paragraph or from one or more broad participation retirement funds, narrow participation retirement funds or pension funds of a governmental entity, international organization or central bank);
(c) a life insurance contract with a coverage period that ends before the insured individual attains age 90, if the contract satisfies the following requirements:
(i) periodic premiums, which do not decrease over time, are payable at least annually until the earlier of
(ii) the contract has no contract value that any person can access (by withdrawal, loan or otherwise) without terminating the contract,
(iii) the amount (other than a death benefit) payable upon cancellation or termination of the contract must not exceed the amount determined by the formula
A − (B + C)
where
- A
- is the aggregate premiums paid for the contract,
- B
- is the total of all mortality, morbidity and expense charges (whether or not actually imposed) for the period or periods of the contract’s existence, and
- C
- is the total of all amounts paid prior to the cancellation or termination of the contract, and
(iv) the contract has not been acquired by a transferee for value;
(d) an account held solely by an estate of a deceased individual, if the documentation for the account includes a copy of the will or death certificate of the individual;
(e) an account established in connection with any of the following:
(i) a court order or judgement,
(ii) a sale, exchange or lease of property, if the account satisfies the following requirements:
(A) the account is funded
(B) the account is established and used solely to secure the obligation of
(C) the assets of the account, including the income earned on the account, will be paid or otherwise distributed for the benefit of the purchaser, seller, lessor or lessee (including to satisfy such person’s obligation) when the property is sold, exchanged or surrendered or the lease terminates,
(D) the account is not a margin or similar account established in connection with a sale or exchange of a financial asset, and
(E) the account is not associated with an account described in paragraph (f),
(iii) an obligation of a financial institution servicing a loan secured by real or immovable property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the property at a later time, or
(iv) an obligation of a financial institution solely to facilitate the payment of taxes at a later time;
(f) a depository account that satisfies the following requirements:
(i) the account exists solely because a customer makes a payment in excess of a balance due with respect to a credit card or other revolving credit facility and the overpayment is not immediately returned to the customer, and
(ii) after June 2017, policies and procedures are in effect relating to overpayments (for this purpose, a customer overpayment does not include credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns) to either
(g) a prescribed account. (compte exclu)
- exempt collective investment vehicle
exempt collective investment vehicle means an investment entity that is regulated as a collective investment vehicle, provided that all of the interests in the collective investment vehicle are held by or through individuals or entities (other than a passive NFE with a controlling person who is a reportable person) that are not reportable persons. (mécanisme de placement collectif dispensé)
- financial account
financial account means an account maintained by a financial institution, and
(a) includes
(i) a depository account,
(ii) a custodial account,
(iii) in the case of an investment entity, any equity or debt interest in the financial institution, except that it does not include any equity or debt interest in an entity that is an investment entity solely because it,
(A) renders investment advice to, and acts on behalf of, a customer for the purpose of investing, managing or administering financial assets deposited in the name of the customer with a financial institution other than such entity, or
(B) manages portfolios for, and acts on behalf of, a customer for the purpose of investing, managing, or administering financial assets deposited in the name of the customer with a financial institution other than such entity,
(iv) any equity or debt interest in the financial institution if one of the purposes of establishing the class of interests was to avoid reporting in accordance with section 271, except that it does not include any equity or debt interest in an entity that is an investment entity solely because it meets the conditions described in clauses (iii)(A) or (B),
(v) any cash value insurance contract and any annuity contract issued or maintained by a financial institution, other than a non-investment-linked, non-transferable immediate life annuity that is issued to an individual and monetizes a pension or disability benefit provided under an account that is an excluded account, and
(vi) an account that is a client name account maintained by a person or entity that is authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments, or to provide portfolio management or investment advising services; and
(b) despite paragraph (a), does not include an excluded account. (compte financier)
- financial asset
financial asset
(a) includes
(i) a security, such as
(ii) a partnership interest,
(iii) a commodity,
(iv) a swap (such as interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps and similar agreements),
(v) an insurance contract or annuity contract, and
(vi) any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap, insurance contract or annuity contract; and
(b) does not include a non-debt, direct interest in real or immovable property. (actif financier)
- financial institution
financial institution means an entity, other than a passive NFE, that is a custodial institution, a depository institution, an investment entity or a specified insurance company. (institution financière)
- governmental entity
governmental entity means the government of a jurisdiction, any political subdivision of a jurisdiction (which, for greater certainty, includes a state, province, county or municipality), a public body performing a function of government in a jurisdiction or any agency or instrumentality of a jurisdiction wholly owned by one or more of the foregoing, unless it is not an integral part or a controlled entity of a jurisdiction (or a political subdivision of a jurisdiction) and for these purposes
(a) an integral part of a jurisdiction means any person, organization, agency, bureau, fund, instrumentality or other body, however designated, that constitutes a governing authority of a jurisdiction and where the net earnings of the governing authority are credited to its own account or to other accounts of the jurisdiction, with no portion inuring to the benefit of any private person, except that an integral part does not include any individual who is a sovereign, official or administrator acting in a private or personal capacity;
(b) a controlled entity means an entity that is separate in form from the jurisdiction or that otherwise constitutes a separate juridical entity, provided that
(i) the entity is wholly owned and controlled by one or more governmental entities directly or indirectly through one or more controlled entities,
(ii) the entity’s net earnings are credited to its own account or to the accounts of one or more governmental entities, with no portion of its income inuring to the benefit of any private person, and
(iii) the entity’s assets vest in one or more governmental entities upon liquidation and dissolution; and
(c) for the purposes of paragraphs (a) and (b),
(i) income is deemed not to inure to the benefit of private persons if such persons are the intended beneficiaries of a governmental program and the program activities are performed for the general public with respect to the common welfare or relate to the administration of government, and
(ii) income is deemed to inure to the benefit of private persons if the income is derived from the use of a governmental entity to conduct a commercial business that provides financial services to private persons. (entité gouvernementale)
- group annuity contract
group annuity contract means an annuity contract under which the obligees are individuals who are associated through an employer, trade association, labour union or other association or group. (contrat de rente de groupe)
- group cash value insurance contract
group cash value insurance contract means a cash value insurance contract that
(a) provides coverage on individuals who are associated through an employer, trade association, labour union or other association or group; and
(b) charges a premium for each member of the group (or member of a class within the group) that is determined without regard to the individual health characteristics other than age, gender and smoking habits of the member (or class of members) of the group. (contrat d’assurance de groupe avec valeur de rachat)
- high value account
high value account means a preexisting individual account with an aggregate balance or value that exceeds 1 million USD on June 30, 2017 or on December 31 of any subsequent year. (compe de valeur élevée)
- insurance contract
insurance contract means a contract (other than an annuity contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability or property risk. (contrat d’assurance)
- international organization
international organization means any intergovernmental organization (or wholly owned agency or instrumentality thereof), including a supranational organization
- investment entity
investment entity means any entity (other than an entity that is an active NFE because of any of paragraphs (d) to (g) of that definition)
(a) that primarily carries on as a business one or more of the following activities or operations for or on behalf of a customer:
(i) trading in money market instruments (such as cheques, bills, certificates of deposit and derivatives), foreign exchange, transferable securities or commodity futures, exchange, interest rate and index instruments,
(ii) individual and collective portfolio management, or
(iii) otherwise investing, administering or managing financial assets or money on behalf of other persons; or
(b) the gross income of which is primarily attributable to investing, reinvesting or trading in financial assets, if the entity is managed by another entity that is a depository institution, a custodial institution, a specified insurance company or an investment entity described in paragraph (a). (entité d’investissement)
- lower value account
lower value account means a preexisting individual account with an aggregate balance or value as of June 30, 2017 that does not exceed 1 million USD. (compte de faible valeur)
- narrow participation retirement fund
narrow participation retirement fund means a fund that is established to provide retirement, disability or death benefits to beneficiaries who are current or former employees (or persons designated by those employees) of one or more employers in consideration for services rendered, if
(a) the fund has fewer than 50 participants;
(b) the fund is sponsored by one or more employers that are not investment entities or passive NFEs;
(c) the employee and employer contributions to the fund (other than transfers of assets from retirement and pension accounts described in paragraph (a) of the definition excluded account) are limited by reference to the employee’s remuneration;
(d) participants that are not resident in Canada are not entitled to more than 20% of the fund’s assets; and
(e) the fund is subject to government regulation and provides information reporting to the Minister. (fonds de retraite à participation étroite)
- natural person
natural person means an individual other than a trust. (personne physique)
- new account
new account means a financial account maintained by a reporting financial institution opened after June 2017. (nouveau compte)
- new entity account
new entity account means a new account held by one or more entities. (nouveau compte d’entité)
- new individual account
new individual account means a new account held by one or more individuals (other than trusts). (nouveau compte de particulier)
- non-financial entity
non-financial entity or NFE means an entity if
- non-reporting financial institution
non-reporting financial institution means a Canadian financial institution that is
(a) the Bank of Canada;
(b) a governmental entity or international organization, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a specified insurance company, custodial institution or depository institution;
(c) a broad participation retirement fund, a narrow participation retirement fund, a pension fund of a governmental entity, international organization or central bank, or a qualified credit card issuer;
(d) an exempt collective investment vehicle;
(e) a trust if a trustee of the trust is a reporting financial institution and reports all information required to be reported under this Part with respect to all reportable accounts of the trust; or
(f) a prescribed entity. (institution financière non déclarante)
- participating jurisdiction
participating jurisdiction means
- participating jurisdiction financial institution
participating jurisdiction financial institution means
(a) a financial institution that is resident in a participating jurisdiction, but excludes a branch of that financial institution that is located outside a participating jurisdiction; and
(b) a branch of a financial institution that is not resident in a participating jurisdiction, if that branch is located in a participating jurisdiction. (institution financière d’une jurisdiction partenaire)
- passive NFE
passive NFE means
- pension fund of a governmental entity, international organization or central bank
pension fund of a governmental entity, international organization or central bank means a fund that is established by a governmental entity, international organization or central bank to provide retirement, disability or death benefits to beneficiaries or participants
(a) that are current or former employees (or persons designated by those employees); or
(b) that are not current or former employees, if the benefits provided to them are in consideration of personal services performed for the governmental entity, international organization or central bank. (fonds de pension désigné)
- preexisting account
preexisting account means
(a) a financial account maintained by a reporting financial institution on June 30, 2017; and
(b) a financial account of an account holder (other than a financial account described in paragraph (a)) maintained by a reporting financial institution if
(i) the account holder also holds with the reporting financial institution (or with a related entity within Canada) a financial account that is a preexisting account under paragraph (a),
(ii) the reporting financial institution (and, as applicable, the related entity within Canada) treats both of the aforementioned financial accounts, and any other financial accounts of the account holder that are preexisting accounts under this paragraph, as a single financial account for the purposes of
(iii) with respect to a financial account that is subject to AML/KYC procedures, the reporting financial institution is permitted to satisfy those AML/KYC procedures for the financial account by relying upon the AML/KYC procedures performed for the preexisting account described in paragraph (a), and
(iv) the opening of the financial account does not require the provision of new, additional or amended customer information by the account holder other than for purposes of this Part. (compte préexistant)
- preexisting entity account
preexisting entity account means a preexisting account held by one or more entities. (compte d’entité préexistant)
- preexisting individual account
preexisting individual account means a preexisting account held by one or more individuals (other than trusts). (compte de particulier préexistant)
- qualified credit card issuer
qualified credit card issuer means a financial institution that satisfies the following requirements:
(a) the financial institution is a financial institution solely because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of a balance due with respect to the card and the overpayment is not immediately returned to the customer; and
(b) the financial institution has policies and procedures either to prevent a customer from making an overpayment in excess of 50,000 USD or to ensure that any customer overpayment in excess of 50,000 USD is refunded to the customer within 60 days, in each case applying the rules set forth in subsection 277(3) for account aggregation, and, for the purposes of this paragraph, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns. (émetteur de carte de crédit déterminé)
- related entity
related entity, in respect of an entity, means an entity if either entity controls the other entity or the two entities are controlled by the same entity or individual (and in the case of two entities that are investment entities described under paragraph (b) of the definition investment entity, the two entities are under common management and such management fulfils the due diligence obligations of the investment entities). For this purpose, control includes direct or indirect ownership of
(a) in the case of a corporation, shares of the capital stock of a corporation that
(b) in the case of a partnership, an interest as a member of the partnership that entitles the member to more than 50% of
(c) in the case of a trust, an interest as a beneficiary under the trust with a fair market value that is greater than 50% of the fair market value of all interests as a beneficiary under the trust. (entité liée)
- reportable account
reportable account means an account that
- reportable jurisdiction
reportable jurisdiction means a jurisdiction other than Canada and the United States of America. (juridiction soumise à déclaration)
- reportable jurisdiction person
reportable jurisdiction person means a natural person or entity that is resident in a reportable jurisdiction under the tax laws of that jurisdiction, or an estate of an individual who was a resident of a reportable jurisdiction under the tax laws of that jurisdiction immediately before death. For this purpose, an entity that has no residence for tax purposes is deemed to be resident in the jurisdiction in which its place of effective management is situated. (personne d’une juridiction soumise à déclaration)
- reportable person
reportable person means a reportable jurisdiction person other than
(a) a corporation the stock of which is regularly traded on one or more established securities markets;
(b) any corporation that is a related entity of a corporation described in paragraph (a);
(c) a governmental entity;
(d) an international organization;
(e) a central bank; or
(f) a financial institution. (personne devant faire l’objet d’une déclaration)
- reporting financial institution
reporting financial institution means a Canadian financial institution that is not a non-reporting financial institution. (institution financière déclarante)
- specified insurance company
specified insurance company means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, cash value insurance contracts or annuity contracts. (compagnie d’assurance particulière)
- TIN
TIN means
(a) the number used by the Minister to identify an individual or entity, including
(b) in respect of a jurisdiction other than Canada, a taxpayer identification number used in that jurisdiction to identify an individual or entity (or a functional equivalent in the absence of a taxpayer identification number). (NIF)
- USD
USD means dollars of the United States of America. (USD)
Marginal note:Interpretation
(2) This Part relates to the implementation of the Common Reporting Standard set out in the Standard for Automatic Exchange of Financial Account Information in Tax Matters approved by the Council of the Organisation for Economic Co-operation and Development and, unless the context otherwise requires, the provisions in this Part are to be interpreted consistently with the Common Reporting Standard, as amended from time to time.
Marginal note:Interpretation — investment entity
(3) For the purposes of the definition investment entity in subsection (1), an entity is considered to be primarily carrying on as a business one or more of the activities described in paragraph (a) of that definition, or an entity’s gross income is primarily attributable to investing, reinvesting or trading in financial assets for the purposes of paragraph (b) of that definition, if the entity’s gross income attributable to the relevant activities equals or exceeds 50% of the entity’s gross income during the shorter of
Marginal note:Equity or debt interest – deeming rule
(4) In the case of a trust that is a financial institution,
(a) an equity interest is deemed to be held by any person treated as a settlor or beneficiary of all or a portion of the trust or any other natural person exercising ultimate effective control over the trust, and
(b) a reportable person is treated as a beneficiary of a trust if the reportable person has the right to receive directly or indirectly (such as through a nominee) a mandatory distribution from the trust or may receive, directly or indirectly, a discretionary distribution from the trust.
Marginal note:General reporting requirements
271 (1) Subject to subsections (3) and (4), each reporting financial institution must report the following information to the Minister with respect to each of its reportable accounts:
(a) the name, address, jurisdiction of residence, TIN and date of birth (in the case of a natural person) of each reportable person that is an account holder of the account;
(b) in the case of any entity that is an account holder of the account and that, after applying the due diligence procedures in sections 275 to 277, is identified as having one or more controlling persons that is a reportable person,
(c) the account number (or functional equivalent in the absence of an account number) of the account;
(d) the name and identifying number (if any) of the reporting financial institution;
(e) the account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value)
(f) in the case of any custodial account,
(i) the total gross amount of interest, the total gross amount of dividends and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period, and
(ii) the total gross proceeds from the sale or redemption of financial assets paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the reporting financial institution acted as a custodian, broker, nominee or otherwise as an agent for the account holder;
(g) in the case of any depository account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and
(h) in the case of any account not described in paragraph (f) or (g), the total gross amount paid or credited to the account holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the reporting financial institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the account holder during the calendar year or other appropriate reporting period.
Marginal note:Currrency
(2) The information reported must identify the currency in which each amount is denominated.
Marginal note:TIN and date of birth
(3) With respect to each reportable account that is a preexisting account,
(a) notwithstanding paragraphs (1)(a) and (b), the TIN or date of birth are not required to be reported if the TIN or the date of birth (as appropriate)
(b) a reporting financial institution is required to use reasonable efforts to obtain the TIN and the date of birth with respect to a preexisting account by the end of the second calendar year following the year in which the preexisting account is identified as a reportable account.
Marginal note:Exceptions
(4) Notwithstanding paragraphs (1)(a) and (b), a TIN of a reportable person is not required to be reported if
Marginal note:General due diligence rules
272 (1) An account is treated as a reportable account as of the date it is identified as a reportable account under the due diligence procedures set out in this section and in sections 273 to 277.
Marginal note:Timing — determination of balance or value
(2) The balance or value of an account is determined on the last day of the calendar year or other appropriate reporting period.
Marginal note:Determination — balance or value
(3) For the purpose of determining whether the balance or value of an account exceeds a particular threshold on the last day of a calendar year, the balance or value must be determined on the last day of the last reporting period that ends on or before the end of the calendar year.
Marginal note:Service provider
(4) A reporting financial institution may use service providers to fulfil its reporting and due diligence obligations imposed, but these obligations shall remain the responsibility of the reporting financial institution.
Marginal note:Optional due diligence procedures
(5) A reporting financial institution may, either with respect to all preexisting accounts or, separately, with respect to any clearly identified group of those accounts, apply the due diligence procedures
Marginal note:Documentation of due diligence procedures
(6) Every reporting financial institution shall establish, maintain and document the due diligence procedures set out in this section and sections 273 to 277.
Marginal note:Due diligence for preexisting individual accounts
273 (1) A preexisting individual account that is a cash value insurance contract or an annuity contract is not required to be reviewed, identified or reported, if the reporting financial institution is effectively prevented by law from selling those contracts to residents of a reportable jurisdiction.
Marginal note:Lower value accounts
(2) The following review procedures apply with respect to lower value accounts that are preexisting individual accounts:
(a) if the reporting financial institution has in its records the address of the individual account holder’s current residence (in this section, their current residence address) based on documentary evidence, the reporting financial institution may treat the individual account holder as being a resident for tax purposes of the jurisdiction in which the address is located for purposes of determining whether the individual account holder is a reportable person;
(b) if the reporting financial institution does not rely on a current residence address for the individual account holder based on documentary evidence as described in paragraph (a), the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the following indicia and apply paragraphs (c) to (f):
(i) identification of the account holder as a resident of a reportable jurisdiction,
(ii) current mailing or residence address (including post office box) in a reportable jurisdiction,
(iii) one or more telephone numbers in a reportable jurisdiction and no telephone number in the jurisdiction of the reporting financial institution,
(iv) standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a reportable jurisdiction,
(v) currently effective power of attorney or signatory authority granted to a person with an address in a reportable jurisdiction, and
(vi) a hold mail instruction or in-care-of address in a reportable jurisdiction if the reporting financial institution does not have any other address on file for the account holder;
(c) if none of the indicia listed in paragraph (b) are discovered in the electronic search, then no further review is required until the earlier of
(d) if any of the indicia listed in subparagraphs (b)(i) to (v) are discovered in the electronic search or if there is a change in circumstances that results in one or more of the indicia in paragraph (b) being associated with the account, then the reporting financial institution must treat the account holder as a resident for tax purposes of each reportable jurisdiction for which an indicium is identified, unless one of the exceptions in paragraph (f) applies with respect to that account;
(e) if a hold mail instruction or in-care-of address in a reportable jurisdiction is discovered in the electronic search and no other address and none of the other indicia listed in subparagraphs (b)(i) to (v) are identified for the account holder, then
(i) the reporting financial institution must do one (if the relevant information is obtained) or both (in the order most appropriate to the circumstances) of the following:
(ii) if the paper record search referred to in clause (i)(A) fails to establish an indicium and the attempt to obtain the self-certification or documentary evidence referred to in clause (i)(B) is not successful, then the reporting financial institution must report the account as an undocumented account; and
(f) notwithstanding the discovery of indicia under paragraph (b), a reporting financial institution is not required to treat an account holder as a resident of a reportable jurisdiction if
(i) both
(A) the account holder information contains
(I) a current mailing or residence address in the reportable jurisdiction,
(II) one or more telephone numbers in the reportable jurisdiction (and no telephone number in the jurisdiction of the reporting financial institution), or
(III) standing instructions (with respect to financial accounts other than depository accounts) to transfer funds to an account maintained in a reportable jurisdiction, and
(B) the reporting financial institution obtains, or has previously reviewed and currently maintains a record of,
(ii) both
Marginal note:Enhanced review procedure – high value accounts
(3) The following enhanced review procedures apply with respect to high value accounts that are preexisting individual accounts:
(a) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the indicia described in paragraph (2)(b);
(b) subject to paragraph (c), the reporting financial institution must review for any of the indicia described in paragraph (2)(b)
(i) the current customer master file, and
(ii) the following documents associated with the account, and obtained by the reporting financial institution within the last five years, to the extent that they are not contained in the current customer master file:
(A) the most recent documentary evidence collected with respect to the account,
(B) the most recent account opening contract or documentation,
(C) the most recent documentation obtained by the reporting financial institution in accordance with AML/KYC procedures or for other regulatory purposes,
(D) any power of attorney or signature authority forms currently in effect, and
(E) any standing instructions (other than with respect to a depository account) to transfer funds currently in effect;
(c) a reporting financial institution is not required to perform the paper record search described in paragraph (b) to the extent that the reporting financial institution’s electronically searchable information includes the following:
(i) the account holder’s residence status,
(ii) the account holder’s residence address and mailing address currently on file with the reporting financial institution,
(iii) the account holder’s telephone number currently on file, if any, with the reporting financial institution,
(iv) in the case of financial accounts other than depository accounts, whether there are standing instructions to transfer funds in the account to another account (including an account at another branch of the reporting financial institution or at another financial institution),
(v) whether there is a hold mail instruction or current in-care-of address for the account holder, and
(vi) whether there is any power of attorney or signatory authority for the account;
(d) in addition to the electronic and paper record searches described in paragraphs (a) to (c), the reporting financial institution must treat as a reportable account any high value account assigned to a relationship manager (including any financial accounts aggregated with that high value account under section 277) if the relationship manager has actual knowledge that the account holder is a reportable person;
(e) with respect to the enhanced review of high value accounts described in paragraphs (a) to (d),
(i) if none of the indicia listed in paragraph (2)(b) are discovered in the enhanced review and the account is not identified as being held by a reportable person in paragraph (d), then further action is not required until there is a change in circumstances that results in one or more indicia being associated with the account,
(ii) if any of the indicia listed in subparagraphs (2)(b)(i) through (v) are discovered in the enhanced review, or if there is a subsequent change in circumstances that results in one or more indicia being associated with the account, then the reporting financial institution must treat the account as a reportable account with respect to each reportable jurisdiction for which an indicium is identified unless one of the exceptions in paragraph (2)(f) applies with respect to that account, and
(iii) if a hold mail instruction or in-care-of address is discovered in the enhanced review and no other address or other indicia listed in subparagraphs (2)(b)(i) to (v) are identified for the account holder, then the reporting financial institution must
(f) if a preexisting individual account is not a high value account on June 30, 2017, but becomes a high value account as of the last day of a subsequent calendar year,
(i) the reporting financial institution must complete the enhanced review procedures described in this subsection with respect to the account within the calendar year following the year in which the account becomes a high value account, and
(ii) if the account is identified as a reportable account based on the review in subparagraph (i), the reporting financial institution must report the required information about the account with respect to the year in which it is identified as a reportable account (and subsequent years on an annual basis, unless the account holder ceases to be a reportable person);
(g) if a reporting financial institution applies the enhanced review procedures described in this subsection to a high value account in a year, then the reporting financial institution is not required to reapply those procedures – other than the relationship manager inquiry described in paragraph (d) – to the same high value account in any subsequent year unless the account is undocumented, in which case the reporting financial institution must re-apply them annually until the account ceases to be undocumented;
(h) if there is a change of circumstances with respect to a high value account that results in one or more indicia described in paragraph (2)(b) being associated with the account, then the reporting financial institution must treat the account as a reportable account with respect to each reportable jurisdiction for which an indicium is identified unless one of the exceptions in paragraph (2)(f) applies with respect to that account; and
(i) a reporting financial institution must implement procedures to ensure that a relationship manager identifies any change in circumstances of an account.
Marginal note:Timing of review
(4) Each preexisting individual account must be reviewed in accordance with subsection (2) or (3) before
Marginal note:Reportable preexisting individual accounts
(5) Any preexisting individual account that has been identified as a reportable account under this section must be treated as a reportable account in all subsequent years, unless the account holder ceases to be a reportable person.
Marginal note:Due diligence – new individual accounts
274 (1) Upon opening a new individual account, the reporting financial institution must obtain a self-certification (which may be a part of the account opening documentation) that allows the reporting financial institution to
(a) determine the account holder’s residence for tax purposes; and
(b) confirm the reasonableness of the self-certification taking into account information obtained by the reporting financial institution in connection with the opening of the account, including any documentation collected in accordance with the AML/KYC procedures.
Marginal note:Determination of reportable account
(2) If the self-certification for a new individual account establishes that the account holder is resident for tax purposes in a reportable jurisdiction, then
Marginal note:Requirement to obtain new self-certification
(3) If there is a change in circumstances with respect to a new individual account that causes the reporting financial institution to know, or have reason to know, that the original self-certification is incorrect or unreliable, then the reporting financial institution
Marginal note:Due diligence – preexisting entity accounts
275 (1) Unless the reporting financial institution elects otherwise — either with respect to all preexisting entity accounts or, separately, with respect to any clearly identified group of those accounts — a preexisting entity account with an aggregate account balance or value that does not exceed 250,000 USD on June 30, 2017 is not required to be reviewed, identified or reported as a reportable account until the aggregate account balance or value exceeds 250,000 USD on the last day of any subsequent calendar year.
Marginal note:Application of subsection (4)
(2) The review procedures set forth in subsection (4) apply to a preexisting entity account if it has an aggregate account balance or value that exceeds 250,000 USD on
Marginal note:Determination of reportable accounts
(3) With respect to preexisting entity accounts described in subsection (2), the only accounts that shall be treated as reportable accounts are accounts that are held by
Marginal note:Review procedures — preexisting entity account
(4) If this subsection applies to a preexisting entity account, a reporting financial institution must apply the following review procedures to determine whether the account is held by one or more reportable persons or by passive NFEs with one or more controlling persons who are reportable persons:
(a) review information maintained for regulatory or customer relationship purposes (including information collected in accordance with AML/KYC procedures) to determine whether the information indicates that the account holder is resident in a reportable jurisdiction and, if so, the reporting financial institution must treat the account as a reportable account unless it
(b) with respect to an account holder of a preexisting account (including an entity that is a reportable person), the reporting financial institution must determine whether the account holder is a passive NFE with one or more controlling persons who are reportable persons and for the purposes of
(i) determining whether the account holder is a passive NFE, the reporting financial institution must obtain a self-certification from the account holder to establish its status, unless it has information in its possession or information is publicly available, based on which it can reasonably determine that the account holder is
(ii) determining the controlling persons of an account holder, a reporting financial institution may rely on information collected and maintained in accordance with AML/KYC procedures, and
(iii) determining whether a controlling person of a passive NFE is a reportable person, a reporting financial institution may rely on
(A) information collected and maintained in accordance with AML/KYC procedures in the case of a preexisting entity account held by one or more NFEs with an aggregate account balance or value that does not exceed 1 million USD, or
(B) a self-certification from the account holder or the controlling person indicating the jurisdiction in which the controlling person is resident for tax purposes.
Marginal note:Timing of review
(5) Each preexisting entity account must be reviewed in accordance with subsection (4) before
Marginal note:Change of circumstances
(6) If there is a change of circumstances with respect to a preexisting entity account that causes the reporting financial institution to know, or have reason to know, that the self-certification or other documentation associated with the account is incorrect or unreliable, the reporting financial institution must redetermine the status of the account in accordance with subsection (4).
Marginal note:Due diligence for new entity accounts
276 For new entity accounts, a reporting financial institution must apply the following review procedures to determine whether the account is held by one or more reportable persons or by passive NFEs with one or more controlling persons who are reportable persons:
(a) the reporting financial institution must
(i) obtain a self-certification (which may be part of the account opening documentation) that allows the reporting financial institution to determine the account holder’s residence for tax purposes and confirm the reasonableness of the self-certification based on the information obtained by the reporting financial institution in connection with the opening of the account, including any documentation collected in accordance with AML/KYC procedures, and
(ii) if the self-certification referred to in subparagraph (i) indicates that the account holder is resident in a reportable jurisdiction, treat the account as a reportable account unless it reasonably determines, based on information in its possession or information that is publicly available, that the account holder is not a reportable person with respect to the reportable jurisdiction; and
(b) with respect to an account holder of a new entity account (including an entity that is a reportable person), the reporting financial institution must determine whether the account holder is a passive NFE with one or more controlling persons who are reportable persons and, if so, treat the account as a reportable account and, for the purposes of
(i) determining whether the account holder is a passive NFE, the reporting financial institution must obtain a self-certification from the account holder to establish its status, unless it has information in its possession or information is publicly available, based on which it can reasonably determine that the account holder is
(ii) determining the controlling persons of an account holder, a reporting financial institution may rely on information collected and maintained in accordance with AML/KYC procedures, and
(iii) determining whether a controlling person of a passive NFE is a reportable person, a reporting financial institution may rely on a self-certification from the account holder or the controlling person.
Marginal note:Special due diligence rules
277 (1) A reporting financial institution may not rely on a self-certification or documentary evidence if the reporting financial institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable.
Marginal note:Exception — individual beneficiary receiving death benefit
(2) A reporting financial institution may presume that an individual beneficiary (other than the owner) of a cash value insurance contract or an annuity contract receiving a death benefit is not a reportable person and may treat the financial account as other than a reportable account unless it has actual knowledge, or reason to know, that the beneficiary is a reportable person.
Marginal note:Aggregation rules
(3) For the purposes of
(a) determining the aggregate balance or value of financial accounts held by an individual or entity,
(i) a reporting financial institution is required to aggregate all financial accounts maintained by the reporting financial institution, or by a related entity, but only to the extent that the reporting financial institution’s computerized systems
(ii) each holder of a jointly held financial account shall be attributed the entire balance or value of the jointly held financial account; and
(b) determining the aggregate balance or value of financial accounts held by an individual in order to determine whether a financial account is a high value account, a reporting financial institution is also required — in the case of any financial accounts that a relationship manager knows, or has reason to know, are directly or indirectly owned, controlled or established (other than in a fiduciary capacity) by the same individual — to aggregate all such accounts.
Marginal note:Dealer accounts
(4) Subsection (5)
(a) applies to a reporting financial institution in respect of a client name account maintained by the institution if
(i) property recorded in the account is also recorded in a financial account (in this subsection and subsection (5) referred to as the related account) maintained by a financial institution (in this subsection and subsection (5) referred to as the dealer) that is authorized under provincial legislation
(ii) the dealer has advised the institution whether the related account is a reportable account; and
(b) does not apply, despite paragraph (a), if it can reasonably be concluded by the institution that the dealer has failed to comply with its obligations under this Part.
Marginal note:Dealer accounts
(5) If this subsection applies to a reporting financial institution in respect of a client name account,
Marginal note:Group insurance and annuities
(6) A reporting financial institution may treat a financial account that is a member’s interest in a group cash value insurance contract or group annuity contract as a financial account that is not a reportable account until the day on which an amount becomes payable to the employee, certificate holder or beneficiary, if the financial account meets the following requirements:
(a) the group cash value insurance contract or group annuity contract is issued to an employer and covers 25 or more employees or certificate holders;
(b) the employees or certificate holders are entitled to
(c) the aggregate amount payable to any employee or certificate holder or beneficiary does not exceed 1 million USD.
Marginal note:Reporting
278 (1) Every reporting financial institution shall file with the Minister, before May 2 of each calendar year, an information return in prescribed form relating to each reportable account maintained by the institution at any time during the immediately preceding calendar year and after June 30, 2017.
Marginal note:Electronic filing
(2) The information return required under subsection (1) shall be filed by way of electronic filing.
Marginal note:Record keeping
279 (1) Every reporting financial institution shall keep, at the institution’s place of business or at such other place as may be designated by the Minister, records that the institution obtains or creates for the purpose of complying with this Part, including self-certifications and records of documentary evidence.
Marginal note:Form of records
(2) Every reporting financial institution required by this Part to keep records that does so electronically shall retain them in an electronically readable format for the retention period referred to in subsection (3).
Marginal note:Retention of records
(3) Every reporting financial institution that is required to keep, obtain or create records under this Part shall retain those records for a period of at least six years following
Marginal note:Anti-avoidance
280 If a person enters into an arrangement or engages in a practice, the primary purpose of which can reasonably be considered to be to avoid an obligation under this Part, the person is subject to the obligation as if the person had not entered into the arrangement or engaged in the practice.
Marginal note:Production of TIN
281 (1) Every reportable person shall provide their TIN at the request of a reporting financial institution that is required under this Part to make an information return requiring the TIN.
Marginal note:Confidentiality of TIN
(2) A person required to make an information return referred to in subsection (1) shall not knowingly use, communicate or allow to be communicated, otherwise than as required or authorized under this Act or a regulation, the TIN without the written consent of the reportable person.
Marginal note:Penalty for failure to provide TIN
(3) Every reportable person who fails to provide on request their TIN to a reporting financial institution that is required under this Part to make an information return requiring the TIN is liable to a penalty of $500 for each such failure, unless
(a) an application for the assignment of the TIN is made to the relevant reportable jurisdiction not later than 90 days after the request was made and the TIN is provided to the reporting financial institution that requested it within 15 days after the reportable person received it; or
(b) the reportable person is not eligible to obtain a TIN from the relevant reportable jurisdiction (including because the relevant reportable jurisdiction does not issue TINs).
Marginal note:Assessment
(4) The Minister may at any time assess any amount payable under subsection (3) by any person and, if the Minister sends a notice of assessment to the person, sections 150 to 163, subsections 164(1) and (1.4) to (7), sections 165 to 167 and Division J of Part I apply with such modifications as the circumstances require.
(2) Subsection (1) comes into force on July 1, 2017.
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