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Canada: Budget 2013: Administrative international tax proposals

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John Leopardi


Emmanuel Sala

New measures targeting international tax evasion and addressing aggressive international tax avoidance to "enhance the integrity of the tax system" were proposed in the March 2013 Canadian budget. Seemingly referring to the MIL Investments, Prevost Car and Velcro decisions, the government acknowledged that it has been unsuccessful in challenging perceived treaty shopping and announced a public consultation to provide stakeholders with an opportunity to comment on possible measures that would "protect the integrity of Canada's tax base while preserving a business tax environment that is conducive to foreign investment".

Specified foreign property reporting requirements

Effective in 2013 and subsequent taxation years, the normal reassessment period will be extended by an additional three years for Canadian residents who fail to comply with foreign reporting requirements regarding certain types of foreign property held offshore (including funds held outside of Canada) with a cost in excess of C$100,000 ($96,712).

The relevant tax form will also be revised to provide more detailed information, including the names of specific foreign institutions and countries where offshore assets are located and the foreign income earned on those assets.

Information requirements regarding unnamed persons

The current ex parte judicial procedure authorising the Canada Revenue Agency (CRA) to obtain information from any third party about unnamed persons will be replaced, effective when the enacting legislation is passed, with a procedure under which the third party would be given notice of the application for the order. The third party would then be required to make any representations at the initial hearing, thus avoiding subsequent judicial reviews stemming from a third party challenging ex parte orders.

International electronic funds transfers

Beginning in 2015, certain financial intermediaries including banks, credit unions, trust and loan companies, money services businesses and casinos will be required to report international electronic funds transfers of $10,000 or more to the CRA.

Tax whistleblower programme

The CRA will launch a programme under which it will offer rewards of up to 15% of federal tax collected to individuals that provide information to the CRA that leads to the collection of outstanding taxes of more than $100,000 in respect of international tax non-compliance.

John Leopardi (john.leopardi@blakes.com)

Tel: + 1 514 982 5030

Emmanuel Sala (emmanuel.sala@blakes.com)

Tel: +1 514 982 5081

Blake, Cassels & Graydon

Website:www.blakes.com

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