Author: Nicolas Simard

About Nicolas Simard

Nicolas Simard is a Partner with Fasken's Tax group based in Montreal and may be reached at 514-397-5288 or at nsimard@fasken.com.

Nicolas Simard est associé du groupe de fiscalité de Fasken à Montréal et peut être joint au 514-397-5288 ou à nsimard@fasken.com.

Alberta, Alerts, Canada, Français, Ontario, Quebec

Actifs étrangers et échange automatique de renseignements : 3 mois avant l’apocalypse

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Qu’est-ce que « l’échange automatique de renseignements financiers »?

Afin d’accroître la transparence fiscale à travers le monde, l’Organisation de coopération et de développement économiques (OCDE) a adopté la norme commune de déclaration (NCD) le 15 juillet 2014. L’initiative de la NCD invite les juridictions participantes à obtenir des renseignements auprès des institutions financières de leur pays et à les échanger automatiquement avec d’autres juridictions sur une base annuelle. L’objectif est d’accroître l’observation des règles fiscales en fournissant des renseignements importants aux juridictions participantes afin de leur permettre de déterminer si leurs citoyens déclarent correctement leurs actifs et leurs revenus étrangers.

Cependant, puisque la NCD n’est pas contraignante, 90 juridictions ont également signé l’Accord Multilatéral entre Autorités Compétentes (AMAC) sur l’échange automatique de renseignements financiers. L’AMAC fournit un mécanisme pour faciliter l’échange de renseignements conformément à la NCD. Les renseignements à divulguer comprennent ce qui suit :

  • Le nom, l’adresse, le numéro d’identification du contribuable et la date et le lieu de naissance de chaque titulaire du compte;
  • Le numéro de compte;
  • Le nom et le numéro d’identification de l’institution financière;
  • Le solde ou la valeur du compte (y compris, dans le cas d’un contrat d’assurance comportant une valeur de rachat ou d’un contrat de rente, la valeur de rachat) à la fin de l’année civile concernée ou à la fermeture du compte;
  • Le montant total des intérêts, des dividendes et des autres revenus générés relativement aux actifs détenus dans le compte.

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!Jurisdiction, Africa, Alberta, Analysis, British Columbia, Canada, Cross-border (Canada/US), Europe, France, Israel, Ontario, Quebec, South Africa, United Kingdom

Why now is the time to do a voluntary disclosure of foreign assets

money-515058_1920The Canada Revenue Agency’s (the ‘’CRA’’) voluntary disclosures program allows taxpayers who meet certain conditions to correct inaccurate or incomplete information previously submitted to the CRA, or to disclose information not previously reported on their tax form. Under the current voluntary disclosures program, those who make a valid disclosure will be responsible for paying the taxes and reduced interest owing as a result of their disclosure, the whole without penalties or fear of prosecution. However, access to the voluntary disclosures program will be limited in the near future and radical changes will be introduced.

Access to the voluntary disclosures program limited for some and radical changes for others

However, on May 29, 2017, the CRA announced by the way of its Report on Progress that a revised voluntary disclosures program policy would be introduced shortly. The changes sought will tighten the access to the voluntary disclosures program and the relief provided. This announce by the CRA is made after the recommendation from the Standing Committee on Finance to conduct a review of the voluntary disclosures program as part of the strategy to combat offshore tax evasion and aggressive tax planning.

In completing its review of the program, CRA sought input from the Offshore Compliance Advisory Committee (the ‘’OCAC’’). In December 2016, the OCAC released the ‘’Report on the Voluntary Disclosures Program’’ which sets out different recommendations to ‘’improve’’ the program. The main contemplated alterations are to, in certain circumstances :

  1. increase the period for which full interest must be paid;
  2. reduce penalties relief in certain circumstances so that the taxpayers pay more than they would pay if they had been fully compliant; and
  3. even deny relief from civil penalties.

Such circumstances could include, for example :

  • Situations where large dollar amounts of tax were avoided;
  • Active efforts to avoid detection and the use of complex offshore structures;
  • Multiple years of non-compliance;
  • Disclosures motivated by CRA statements regarding its intended focus of compliance, by broad-based tax compliance programs or by the reception of leaked confidential information by the CRA such as the Panama Papers data leak; and
  • Other circumstances in which the CRA considers that the high degree of the taxpayer’s culpability contributed to the failure to comply.

Less certain and more expensive results

If implemented by the CRA, the recommendations of the OCAC would significantly change the current voluntary disclosures program and the result of a disclosure would be more discretionary and expensive. Therefore, taxpayers entertaining the possibility of making a voluntary disclosure may want to act soon as the CRA intends to tighten the criteria for acceptance into the voluntary disclosures program and to be less generous in its application.

For more information about filing a voluntary disclosure download “The Voluntary Disclosures Programs in Canada (And in Québec)“.

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!Jurisdiction, !Language, Analysis, Canada, Europe, France, United Kingdom

English vs French – Linguistic favoritism by Tax Court Judge : decision quashed by the FCA

 Fasken Martineau Tax bulletin

In Industrielle Alliance vs. Mazraani and MNR[1], the Federal Court of Appeal recently quashed a Tax Court of Canada decision on the basis that the trial judge violated the linguistic rights of both witnesses and counsel for Industrielle Alliance. The reasons for judgment can be found here in English and French.

The Tax Court of Canada decision

Before the Tax Court of Canada (TCC), Kassem Mazraani[2] appealed the Minister’s determination that he was not engaged in insurable employment while working for Industrielle Alliance between April and November 2012. Industrielle was an intervenor to the appeal and had taken the position that the Minister’s determination was correct since an independent contractor agreement had been concluded with Mazraani. The appeal was heard under the informal procedure before Justice Archambault and the hearing lasted 6 days. Mazraani filed his appeal in English, the Minister’s reply was in English also and Industrielle’ s intervention was in French.

In a massive 160 page decision, the TCC concluded that Mazraani was engaged in insurable employment.

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!Jurisdiction, !Language, Analysis, Canada, Français, France, United Kingdom

Favoritisme linguistique lors d’une audition à la Cour canadienne de l’impôt : la Cour d’appel fédérale annule une décision

 Fasken Martineau Tax bulletin

Dans la récente décision Industrielle Alliance, Assurance et services financiers Inc. c. Mazraanim et M.N.R.[1], la Cour d’appel fédérale annule une décision de la Cour canadienne de l’impôt au motif que le juge de première instance a enfreint les droits linguistiques des témoins et de l’avocat de l’Industrielle Alliance. Les motifs du jugement peuvent être consultés ici en anglais et en français.

Décision de la Cour canadienne de l’impôt

Devant la Cour canadienne de l’impôt (CCI), Kassem Mazraani[2] en appelait de la décision du Ministre selon laquelle il n’occupait pas un emploi assurable auprès d’Industrielle Alliance durant la période d’avril à novembre 2012. Industrielle Alliance était une intervenante dans le cadre de l’appel à la CCI. Elle soutenait que la décision du Ministre était juste, puisque l’entreprise avait conclu un contrat d’entrepreneur indépendant avec Mazraani. L’appel a été entendu selon la procédure informelle par le juge Archambault et l’audition a duré six (6) jours. L’avis d’appel de Mazraani était en anglais, la réponse du Ministre était aussi en anglais et l’avis d’intervention d’Industrielle Alliance était en français.

Dans une décision imposante de 160 pages, la CCI a conclu que Mazraani avait occupé un emploi assurable.

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Analysis, British Columbia, Canada, Ontario, Quebec

Panama Papers data leak will prompt more tax audits targeting wealthy Canadians

A huge data leak from a Panama-based law firm has exposed billions in secret, offshore transactions involving multiple political leaders around the world and approximately 350 Canadians with offshore tax haven investments.

Previous leaks of offshore activities have led the Canada Revenue Agency (CRA) to engage in multiple tax audits targeting wealthy Canadians, such as clients of the LGT Bank, the Swiss HSBC Bank, and recently clients of one international accounting firm, just to name a few. This time should be no different. CRA was already instructed to get the leaked data in Panama Papers.

Many OECD-participating countries have engaged in a fight against tax evasion, treaty shopping and base erosion and profit-shifting (BEPS). Combined with the upcoming exchanges of financial information between countries starting in 2017 and 2018, Canada’s “new” offshore tax compliance section since 2013 and the offshore tax informant program (OTIP) rewarding whistleblowers, wealthy Canadians and businesses engaged in aggressive tax planning are more likely than ever to be audited.

In addition, the 2016 Federal budget proposed a plan to “improve tax compliance, prevent underground economic activity, tax evasion and aggressive tax planning,” requiring an investment of $444.4 million over five years to be used by the CRA for:

  • hiring additional auditors and specialists
  • developing robust business intelligence infrastructure
  • increasing audit activities
  • improving the quality of investigative work that targets criminal tax evaders

The expected additional revenue from such measures is $2.6 billion.

To most Canadians, these measures may sound perfectly legitimate. But many taxpayers in the province of Québec will hear a familiar tune that evokes unpleasant memories.

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