Canada

To see the determinations and rating of all published reports click here.

Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Nominees that are not subject to AML/CFT laws are not required to maintain ownership and identity information in respect of all persons for whom they act as legal owners.  An obligation should be established for all nominees to maintain relevant ownership information where they act as the legal owners on behalf of any other person.  
Although the materiality of the issue seems very limited Canadian law, with the exception of three provinces, permits the existence of bearer shares or share warrants to bearer in certain forms and circumstances which vary across provinces.   Canada should take measures to ensure that owners of bearer shares and share warrants to bearer are identified in all cases.  
Certain information relevant for identification of beneficial owners is required to be available mainly based on tax and AML/CFT obligations. However, only financial institutions are obligated to identify beneficial owners of companies and partnerships in line with the standard and (i) domestic companies, (ii) foreign companies with sufficient nexus which engaged a relevant DNFBP in Canada, (iii) domestic partnerships and (iv) foreign partnerships that carry on business in Canada or have taxable income therein are not legally required to engage a financial institution in Canada in all cases.  Canada should ensure that beneficial owners of all relevant entities are required to be identified in line with the standard.  
The identification of beneficial owners of trusts is required based on AML/CFT obligations. However, acting as a trustee does not in of itself trigger such obligations. Consequently, the identification of beneficial owners is not required in respect of all express trusts administered in Canada or in respect of which a trustee is resident in Canada unless the trustee is an AML/CFT obligated financial institution or such financial institution is engaged by the trust.   Canada should ensure that identification of beneficial owners of all express trusts administered in Canada or with a trustee resident in Canada is available as required under the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
   
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   In addition to the obligation under the tax law to keep accounting records for two years after dissolution of the entity Canada's laws typically provide for retention rules which require the person who has been granted the custody of the documents of the dissolved company to keep these documents for at least six years after the dissolution. Although such requirement is contained in provincial laws regulating the majority of companies not all provinces have such a rule. Further, it may not be always clear by whom these records are kept and it is not required that these records are available in Canada in all cases. In addition, no such retention rules which would complement the two year retention period under the tax law exist for dissolved partnerships and trusts which ceased to exist.   Canada should strengthen the existing retention requirements so that accounting records are required to be available in Canada after dissolution of an entity or arrangement in all cases. 
Supervision of accounting requirements is carried out mainly through tax audits and tax filing obligations. Although this supervision is generally adequate, supervision of accounting obligations of partnerships and trusts which do not file tax returns or have limited or no tax liability in Canada does not fully reflect the importance of tax supervision for guaranteeing availability of accounting information on these entities or arrangements and practical difficulties in ensuring it.   Canada should take measures to ensure that accounting records including underlying documentation in respect of partnerships and trusts is available in practice in all cases.  
Phase 2 Rating Factors Recommendations
Largely Compliant.     
   
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.   In June 2016 the Supreme Court ruled that the tax authority's access powers are unconstitutional in respect of notaries and lawyers acting in their capacity as legal advisers. The decision raises uncertainty in respect of practical ability of the tax authority to access information held by lawyers and notaries in accordance with the standard in an efficient manner.   Canada should monitor the exercise of the tax authority's access powers in respect of information held by lawyers and notaries and if necessary take measures to ensure that the requested information can be accessed in line with the standard. 
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.