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Automatic Exchange of Financial Account Information in Tax Matters
To facilitate cross-border tax transparency, various Government authorities in close cooperation developed the Standard for Automatic Exchange of Financial Account Information in Tax Matters. This standard intends to equip tax authorities with an effective tool to tackle offshore tax evasion by providing a greater level of information on their residents’ wealth held abroad.
The Standard has now moved to the implementation and application phase with the first exchanges having taken place in September 2017. There are over 100 jurisdictions representing all the major international financial centres that have committed to commence automatic exchange of information in 2017 or 2018.
In order to maximize efficiency and minimize costs the Standard builds on the automated and standardized solutions that jurisdictions previously developed for the purposes of the intergovernmental operationalization of the U.S. laws commonly known as FATCA.
For more information visit OECD website
Enhanced financial account information reporting
Disposal of Principal residence-The change-in-use rules
Before 2016, if you sold your property, and it was your principal residence for every year you owned it, you did not have to report the sale to claim the principal residence exemption.
On December 14, 2017, Parliament passed Bill C-63 which contained the proposed changes to the capital gains rules as they affect the disposition of a principal residence by an individual or trust that were introduced on October 3, 2016. The changes are meant to close loopholes surrounding the capital gains exemption on the sale of a principal residence. Some of the new rules apply to dispositions after September 15, 2016, after October 2, 2016 and some apply after 2016.
Canada Revenue Agency (CRA) announced an administrative change to its reporting requirements for the sale of a principal residence. For dispositions in 2017 and later years, in addition to reporting the sale and designating your principal residence on Schedule 3, you also have to complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). Complete only page 1 of Form T2091 if the property you sold was your principal residence for all the years, or for all but one year, that you owned it.
Income sprinkling (income splitting) is a technique that can be used by high-income individuals to reduce their tax liabilities by allocating their income to lower income family members.
The CRA implemented new rules called Tax on Split Income (TOSI), which came into effect for the 2018 tax year. The expanded the existing tax on split income to restrict income sprinkling involving adult individuals.
The rules state that adult family members will be subject to tax at the highest marginal tax rate of 33% on their split income, which generally includes certain taxable dividends from a private company, taxable capital gains and income from partnerships or trusts. The motive of the CRA is to ensure that the income splitting benefits are not being received by individuals who are not actively involved in a family business.
Please refer to the following links for more detailed guidance on the TOSI rules:
Beware of tax fraud schemes. If you get a call or email that sounds like a scam, it probably is.
Many taxpayers have encountered individuals impersonating tax officials- in person, over the telephone and via email. Usually tax department initiates contacts through regular postal mail. In some circumstances they may visit or make phone calls. Even then, taxpayers will receive several letters and notices.
It is imperative that you are always vigilant with your personal and financial information. Please be aware that there are always criminals trying to get information that they can use to steal your identity or commit fraud to steal money from you or your financial institution.