97. The List of Intermediate and Final Rates for Tariff Items of the “F” Staging Category set out in the schedule to the Act is amended by adding, in numerical order, the tariff items set out in Schedule 2 to this Act.

Coming into Force

Marginal note:November 29, 2013

• 98. (1) Sections 91 and 92 are deemed to have come into force on November 29, 2013.

• Marginal note:May 5, 2014

  (2) Sections 93, 96 and 97 are deemed to have come into force on May 5, 2014.

PART 5CANADA–UNITED STATES ENHANCED TAX INFORMATION EXCHANGE AGREEMENT IMPLEMENTATION ACT

Enactment of Act

Marginal note:Enactment

99. The Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act, whose text is as follows and whose schedule is set out in Schedule 3 to this Act, is enacted:

R.S., c. 1 (5th Supp.)Amendments to the Income Tax Act

• 100. (1) The portion of subsection 162(6) of the Income Tax Act before paragraph (b) is replaced by the following:

  • Marginal note:Failure to provide identification number

    (6) Every person or partnership who fails to provide on request their Social Insurance Number, their business number or their U.S. federal taxpayer identifying number to a person required under this Act or a regulation to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless

    • (a) an application for the assignment of the number is made within 15 days (or, in the case of a U.S. federal taxpayer identifying number, 90 days) after the request was received; and

• (2) Subsection (1) comes into force on the day on which the agreement set out in the schedule to the Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act enters into force.

• 101. (1) The Act is amended by adding the following after Part XVII:

  PART XVIIIENHANCED INTERNATIONAL INFORMATION REPORTING

  Marginal note:Definitions

  • 263. (1) The following definitions apply in this Part.

    “agreement”

    « accord »

    “agreement” has the same meaning as in section 2 of the Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act.

    “electronic filing”

    « transmission électronique »

    “electronic filing” means using electronic media in a manner specified by the Minister.

    “listed financial institution”

    « institution financière particulière »

    “listed financial institution” means a financial institution that is

    • (a) an authorized foreign bank within the meaning of section 2 of the Bank Act in respect of its business in Canada, or a bank to which that Act applies;

    • (b) a cooperative credit society, a savings and credit union or a caisse populaire regulated by a provincial Act;

    • (c) an association regulated by the Cooperative Credit Associations Act;

    • (d) a central cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, or a credit union central or a federation of credit unions or caisses populaires that is regulated by a provincial Act other than one enacted by the legislature of Quebec;

    • (e) a financial services cooperative regulated by An Act respecting financial services cooperatives, R.S.Q., c. C-67.3, or An Act respecting the Mouvement Desjardins, S.Q. 2000, c. 77;

    • (f) a life company or a foreign life company to which the Insurance Companies Act applies or a life insurance company regulated by a provincial Act;

    • (g) a company to which the Trust and Loan Companies Act applies;

    • (h) a trust company regulated by a provincial Act;

    • (i) a loan company regulated by a provincial Act;

    • (j) an entity authorized under provincial legislation to engage in the business of dealing in securities or any other financial instruments, or to provide portfolio management, investment advising, fund administration, or fund management, services;

    • (k) an entity that is represented or promoted to the public as a collective investment vehicle, mutual fund, exchange traded fund, private equity fund, hedge fund, venture capital fund, leveraged buyout fund or similar investment vehicle that is established to invest or trade in financial assets and that is managed by an entity referred to in paragraph (j);

    • (l) an entity that is a clearing house or clearing agency; or

    • (m) a department or an agent of Her Majesty in right of Canada or of a province that is engaged in the business of accepting deposit liabilities.

    “non-reporting Canadian financial institution”

    « institution financière canadienne non déclarante »

    “non-reporting Canadian financial institution” means any Canadian financial institution or other entity resident in Canada that

    • (a) is described in any of paragraphs C, D and G to J of section III of Annex II to the agreement;

    • (b) makes a reasonable determination that it is described in any of paragraphs A, B, E and F of section III of Annex II to the agreement;

    • (c) qualifies as an exempt beneficial owner under relevant U.S. Treasury Regulations in effect on the date of signature of the agreement; or

    • (d) makes a reasonable determination that it qualifies as a deemed-compliant FFI under relevant U.S. Treasury Regulations in effect on the date of signature of the agreement.

    “U.S. reportable account”

    « compte déclarable américain »

    “U.S. reportable account” means a financial account that, under the agreement, is to be treated as a U.S. reportable account.

  • Marginal note:Financial institution

    (2) For the purposes of this Part, “Canadian financial institution” and “reporting Canadian financial institution” each have the meaning that would be assigned by the agreement, and the definition “non-reporting Canadian financial institution” in subsection (1) has the meaning that would be assigned by that subsection, if the definition “Financial Institution” in subparagraph 1(g) of Article 1 of the agreement were read as follows:

    • g) The term “Financial Institution” means any Entity that is a Custodial Institution, a Depository Institution, an Investment Entity or a Specified Insurance Company, and that is a listed financial institution within the meaning of Part XVIII of the Income Tax Act.

  • Marginal note:Financial account

    (3) For the purposes of this Part, the agreement is to be read as if the definition “Financial Account” in subparagraph 1(s) of Article 1 of the agreement included the following subparagraph after subparagraph (1):

    • (1.1) 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.

  • Marginal note:Identification number

    (4) For the purposes of this Part, a reference in the agreement to “Canadian TIN” or “taxpayer identification number” is to be read as including a reference to Social Insurance Number.

  • Marginal note:Term defined in agreement

    (5) In this Part, a term has the meaning that is defined in, or assigned by, the agreement unless the term is defined in this Part.

  • Marginal note:Amending instrument

    (6) No person shall be liable for a failure to comply with a duty or obligation imposed by this Act that results from an amendment to the agreement unless at the date of the alleged failure,

    • (a) the text of the instrument that effected the amendment had been published in the Canada Gazette; or

    • (b) reasonable steps had been taken to bring the purport of the amendment to the notice of those persons likely to be affected by it.

  Marginal note:Designation of account

  • 264. (1) Subject to subsection (2), a reporting Canadian financial institution may designate a financial account to not be a U.S. reportable account for a calendar year if the account is

    • (a) a preexisting individual account described in paragraph A of section II of Annex I to the agreement;

    • (b) a new individual account described in paragraph A of section III of Annex I to the agreement;

    • (c) a preexisting entity account described in paragraph A of section IV of Annex I to the agreement; or

    • (d) a new entity account described in paragraph A of section V of Annex I to the agreement.

  • Marginal note:U.S. reportable account

    (2) A reporting Canadian financial institution may not designate a financial account for a calendar year unless the account is part of a clearly identifiable group of accounts all of which are designated for the year.

  • Marginal note:Applicable rules

    (3) The rules in paragraph C of section VI of Annex I to the agreement apply in determining whether a financial account is described in any of paragraphs (1)(a) to (d).

  Marginal note:Identification obligation  — financial accounts

  • 265. (1) Every reporting Canadian financial institution shall establish, maintain and document the due diligence procedures set out in subsections (2) and (3).

  • Marginal note:Due diligence  — general

    (2) Every reporting Canadian financial institution shall have the following due diligence procedures:

    • (a) for preexisting individual accounts that are lower value accounts, other than accounts described in paragraph A of section II of Annex I to the agreement, the procedures described in paragraphs B and C of that section, subject to paragraph F of that section;

    • (b) for preexisting individual accounts that are high value accounts, other than accounts described in paragraph A of section II of Annex I to the agreement, the procedures described in paragraphs D and E of that section, subject to paragraph F of that section;

    • (c) for new individual accounts, other than accounts described in paragraph A of section III of Annex I to the agreement,

      • (i) the procedures described in paragraph B of section III of Annex I to the agreement, or

      • (ii) in respect of a clearly identifiable group of accounts, the procedures that would be applicable if the accounts were preexisting individual accounts that were lower value accounts, with such modifications as the circumstances require, including procedures to review any documentary evidence obtained by the institution in connection with the opening of the accounts for the U.S. indicia described in subparagraph B(1) of section II of Annex I to the agreement;

    • (d) for preexisting entity accounts, other than accounts described in paragraph A of section IV of Annex I to the agreement, the procedures described in paragraphs D and E of that section; and

    • (e) for new entity accounts, other than accounts described in paragraph A of section V of Annex I to the agreement, the procedures described in paragraphs B to E of that section.

  • Marginal note:Due diligence  — no designation

    (3) If a reporting Canadian financial institution does not designate a financial account under subsection 264(1) for a calendar year, the institution shall have the following due diligence procedures with respect to the account:

    • (a) if the account is a preexisting individual account described in paragraph A of section II of Annex I to the agreement, the procedures described in paragraphs B and C of that section, subject to paragraph F of that section;

    • (b) if the account is a new individual account described in paragraph A of section III of Annex I to the agreement,

      • (i) the procedures described in paragraph B of section III of Annex I to the agreement, or

      • (ii) in respect of an account that is part of a clearly identifiable group of accounts, the procedures that would be applicable if the account were a preexisting individual account that was a lower value account, with such modifications as the circumstances require, including procedures to review any documentary evidence obtained by the institution in connection with the opening of the account for the U.S. indicia described in subparagraph B(1) of section II of Annex I to the agreement;

    • (c) if the account is a preexisting entity account described in paragraph A of section IV of Annex I to the agreement, the procedures described in paragraphs D and E of that section; and

    • (d) if the account is a new entity account described in paragraph A of section V of Annex I to the agreement, the procedures described in paragraphs B to E of that section.

  • Marginal note:Rules and definitions

    (4) For the purposes of subsections (2) and (3), subparagraphs B(1) to (3) of section I, and section VI, of Annex I to the agreement apply except that

    • (a) in applying paragraph C of that section VI, an account balance that has a negative value is deemed to be nil; and

    • (b) the definition “NFFE” in subparagraph B(2) of that section VI is to be read as follows:

      • 2. NFFE

      An “NFFE” means any Non-U.S. Entity that is not an FFI as defined in relevant U.S. Treasury Regulations or is an Entity described in subparagraph B(4)(j) of this section, and also includes any Non-U.S. Entity

      • a) that is resident in Canada and is not a listed financial institution within the meaning of Part XVIII of the Income Tax Act; or

      • b) that is resident in a Partner Jurisdiction other than Canada and is not a Financial Institution.

  • Marginal note:U.S. indicia

    (5) For the purposes of paragraphs (2)(a) and (b), subparagraph (2)(c)(ii), paragraph (3)(a) and subparagraph (3)(b)(ii), subparagraph B(3) of section II of Annex I to the agreement is to be read as follows:

    • 3. If any of the U.S indicia listed in subparagraph B(1) of this section are discovered in the electronic search, or if there is a change in circumstances that results in one or more U.S. indicia being associated with the account, then the Reporting Canadian Financial Institution must seek to obtain or review the information described in the portion of subparagraph B(4) of this section that is relevant in the circumstances and must treat the account as a U.S. Reportable Account unless one of the exceptions in subparagraph B(4) applies with respect to that account.

  • Marginal note:Financial institution

    (6) For the purpose of applying the procedures referred to in paragraphs (2)(d) and (e) and (3)(c) and (d) to a financial account of an account holder that is resident in Canada, the definition “Financial Institution” in subparagraph 1(g) of Article 1 of the agreement is to be read as follows:

    • g) The term “Financial Institution” means any Entity that is a Custodial Institution, a Depository Institution, an Investment Entity or a Specified Insurance Company, and that is a listed financial institution within the meaning of Part XVIII of the Income Tax Act.

  • Marginal note:Dealer accounts

    (7) Subsection (8) applies to a reporting Canadian financial institution in respect of a client name account maintained by the institution if

    • (a) property recorded in the account is also recorded in a financial account (in this subsection and subsection (8) referred to as the “related account”) maintained by a financial institution (in this subsection and subsection (8) referred to as the “dealer”) that is authorized under provincial legislation to engage in the business of dealing in securities or any other financial instrument, or to provide portfolio management or investment advising services; and

    • (b) the dealer has advised the institution whether the related account is a U.S. reportable account.

    However, subsection (8) does not apply if it can reasonably be concluded by the institution that the dealer has failed to comply with its obligations under this section.

  • Marginal note:Dealer accounts

    (8) If this subsection applies to a reporting Canadian financial institution in respect of a client name account,

    • (a) subsections (1) to (4) do not apply to the institution in respect of the account; and

    • (b) the institution shall rely on the determination of the dealer in respect of the related account in determining whether the account is a U.S. reportable account.

  Marginal note:Reporting  — U.S. reportable accounts

  • 266. (1) Every reporting Canadian financial institution shall file with the Minister, before May 2 of each calendar year, an information return in prescribed form relating to each U.S. reportable account maintained by the institution at any time during the immediately preceding calendar year and after June 29, 2014.

  • Marginal note:Reporting  — nonparticipating financial institutions

    (2) Every reporting Canadian financial institution shall file with the Minister, before May 2 of each calendar year, an information return in prescribed form relating to payments, to a nonparticipating financial institution that is the holder of a financial account maintained by the reporting Canadian financial institution, during the immediately preceding calendar year if the immediately preceding year is 2015 or 2016.

  • Marginal note:Filing of return

    (3) An information return required under subsection (1) or (2) shall be filed by way of electronic filing.

  Marginal note:Record keeping

  • 267. (1) Every reporting Canadian 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 Canadian 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 Canadian 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

    • (a) in the case of a self-certification, the last day on which a related financial account is open; and

    • (b) in any other case, the end of the last calendar year in respect of which the record is relevant.

  Marginal note:Anti-avoidance

  268. 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:Deemed-compliant FFI

  269. If a Canadian financial institution makes a reasonable determination that it is to be treated as a deemed-compliant FFI under Annex II to the agreement, this Part applies to the institution, with such modifications as the circumstances require, to the extent that the agreement imposes due diligence and reporting obligations on the institution.

• (2) Subsection (1) comes into force on the day on which the agreement set out in the schedule to the Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act enters into force.