Reporting of International Electronic Funds Transfers
Volume No. 14-02
“the Government of Canada is serious about enforcing tax compliance.”
Tax authorities around the globe are using technology and legislation more aggressively than ever to gather information and curb tax evasion. Rules requiring reporting of international electronic funds transfers (IEFTs) of $10,000 or more have been in place in Canada with respect to anti-money laundering for a number of years. Following on its comments in the 2013 Federal Budget, in a news release dated January 9, 2014, the Department of Finance released draft legislative proposals that will require financial intermediaries to disclose information about IEFTs to the Canada Revenue Agency (CRA) for use in the administration of the Income Tax Actand the Excise Tax Act (which includes the GST/HST legislation), as well as other minor tax statutes (the Excise Act, 2001 and the Air Travellers Security Charge Act).
Starting January 1, 2015, financial intermediaries (such as banks, credit unions, money transfer businesses and casinos) that send out of Canada or receive from outside of Canada an electronic funds transfer of $10,000 CAD or more will be required to file an information return with the Minister of National Revenue. The information must be reported within five working days after the transfer and, in most cases, will be reported electronically.
In practice, this will not require more compliance than is already required from these financial institutions, which report to the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC) for anti-money laundering purposes under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The Department of Finance advises that the reporting will be done electronically through Shared Services Canada, a federal government department, which will route a single report to both FINTRAC and the CRA. What this does mean is that the CRA will now have access to this information.
It is clear that the Government of Canada is serious about enforcing tax compliance and is taking steps to increase the number of tools available to it. Taxpayers who have not reported all their income can correct their filings without risk of penalty and criminal prosecution using the Voluntary Disclosures Program as explained in Tax Tip 13-10.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.
TAX TIP is provided as a free service to clients and friends of Cadesky Tax.
The material provided in Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Cadesky Tax cannot accept any liability for the tax consequences that may result from acting based on the contents hereof.
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