On July 29, 2016, the Department of Finance Canada released for public comment a package of draft legislative proposals and explanatory notes relating to a number of measures announced in the 2016 federal budget, which included, amongst other proposals, the introduction of a Common Reporting Standard penalty and relating consequential amendments to the Income Tax Act (the ITA).
Specifically, the proposed amendments will incorporate new section 281 into the ITA and will require that a “reportable person” must provide its taxpayer identification number, or “TIN” (the number used by the Minister of National Revenue to identify an individual or entity), to any person required to make an information return under the Common Reporting Standard (CRS) to be implemented in Canada as of July 1, 2017. This section also empowers the Minister of National Revenue to assess a $500 penalty against any reportable person for each failure to provide its TIN upon request.
For CRS purposes, the term “reportable person” generally refers to a natural person or entity that is resident in a reportable jurisdiction (excluding Canada and the United States) 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, other than: (i) a corporation the stock of which is regularly traded on one or more established securities markets; (ii) any corporation that is a related entity of a corporation described in clause (i); (iii) a governmental entity; (iv) an international organization; (v) a central bank; or (vi) a financial institution. See definitional subsection ITA 270 (1).