On behalf of the CBA, IIAC, IFIC, and PMAC, we want to acknowledge and thank you for the collaboration and assistance the CRA and the federal government has provided the financial services industry with respect to the “Guidance on the Canada-U.S. Enhanced Tax Information Exchange Agreement” and “Guidance on the Common Reporting Standard” published on April 20, 2020 (the Revised Guidance), including delaying the implementation of penalties until 2021. Further, we appreciate how the federal government has worked closely in partnership with the financial services industry to assist Canadian households and businesses in managing the impact of COVID-19.
The financial industry would like to request that the CRA extend the transitional period providing relief from penalties where financial institutions (FIs) are making good faith efforts to implement the changes necessary to be compliant with the requirements in the Revised Guidance until January 1, 2022. We believe the significant undertakings required to comply with the Revised Guidance and the fact that COVID-19 has strained and challenged both the public and private sectors warrant this request. The precedent for this request was established when the CRA provided transitional relief periods when FATCA was first introduced, which was consistent with the transitional relief provided by the IRS. We would appreciate it if our requested relief was provided in a Notice/FAQ to ensure there is a common understanding among financial institutions.
From a tax reporting, penalty assessment, and external audit perspective, we believe it makes sense to begin enforcement of the penalties at the beginning of a calendar year.
The official submission can be viewed in full here.