A recent information session was held for members of the Canadian investment industry to discuss the impact and implications of a Canadian IGA on the industry. Most of the session was technical in nature, being devoted to what may be described as “back office operations” and the relationships between Introducing and carrying brokers. However there was a general update on the status of the Canada IGA and what to expect. In the notes below, the Canadian investment industry is referred to as “industry” and individual firms are referred to as CFI.
Please note that this posting may be updated if and when new information is received.
Industry does not know when the IGA will be signed. Expectations are for signing by the end of 2013 and definitely no later than mid-March, 2014.
After signing, the IGA will be presented to cabinet for approval.
CRA has suggested to industry that, in the meantime, the Model 1 IGA and UK guidance may be used as a template. However, there will be differences due to different Canadian laws, regulations, procedures and structures.
Industry expects the guidance issued by CRA to be “slimmer’ than the UK guidance. Many details will have to be worked out after the first guidance is released.
The 30% withholding on recalcitrant accounts is being eliminated. Instead, information on those accounts will be forwarded to CRA along with accounts with confirmed U.S. indicia.
Self certification is left to each CFI and likely will not differ greatly from existing KYC/AML procedures. However self certification must address U.S. citizenship and tax residency.
Most registered accounts will be excluded. It is not known for sure, just yet, which ones they will be. Expectations are strong that RRSPs, RESPs and TFSAs will be among the excluded accounts.
No accounts will be closed.
Issues with customers with U.S. indicia was described as “the elephant in the room”
I have a few comments—
Industry expressed frustration over the lack of details they have been given so far. I would guess that actual implementation of the IGA may be delayed for some time as the kinks are worked out.
I found it interesting that there was no mention of Parliamentary approval, just cabinet approval.
This session took place just a few days after the Ottawa press conference and the 2 person protest. Mention was made of Flaherty’s remarks and the G&M article. I had the impression (my opinion only) that the comments to the G&M article were noticed, as well as comments posted elsewhere.
While our focus has been primarily on government, the entire Canadian financial industry should be made aware of our concerns. So, keep those cards and letters (comments and emails) coming.