News release

Revenue Minister streamlines foreign income verification

Vancouver, August 20, 1998... The Honourable Herb Dhaliwal, Minister of National Revenue and M.P. (Vancouver South-Burnaby), today announced streamlined procedures for verifying foreign-based income earned by Canadian residents.

"This new streamlined method of reporting is a fair and efficient way of obtaining the necessary information to verify income from foreign sources while taking into account privacy and other considerations. It is a balanced approach that addresses concerns raised about the proposed requirements while enhancing Revenue Canada's abilities to address concerns with tax havens, " said Mr. Dhaliwal.

Under the new, simplified method of reporting, taxpayers will only have to indicate the range and location of investment for different categories of assets by checking the appropriate box on a reporting form. A detailed description for each individual investment will no longer be required.

Mr. Dhaliwal also announced that the measures to improve foreign income verification, including penalties based on the cost of assets, will be reviewed based on analysis of the first two years of filing. "The five per cent penalty on the cost of assets cannot be applied during the review period as reporting under these rules only begins in 1999," Mr. Dhaliwal stated. "During the review period, Revenue Canada will emphasize educational and outreach activities to maximize voluntary compliance."

Penalties for late filing, for failing to file and for underreporting of income will be applied when reporting begins in April 1999.

Revenue Canada concluded that Canadian residents will be required to report foreign assets over $100,000 through a streamlined "check-the-box" method of reporting starting April 30, 1999, after careful examination of the recommendations made by the Auditor General in a report released June 5, 1998. In his report, the Auditor General suggested that the Government consider some technical modifications to the reporting requirement to reduce the compliance burden and address privacy concerns.

"This is not a new tax. It does nothing more than ensure that the income of all Canadian residents can be verified, which is consistent with our policy to ensure that everyone pays their fair share of taxes," concluded Mr. Dhaliwal.

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Renseignements aux médias :

35C/98