by Edward C. Kelleher
The Canada Revenue Agency (CRA) has postponed new documentation requirements for customers seeking tax relief via DTCC’s TaxRelief SM service until January 1, 2013. The documentation, which will be needed to prove that a client is eligible for a reduced tax withholding rate, was scheduled to take effect January 1, 2012.
The postponement comes after the Securities Industry and Financial Markets Association (SIFMA), with input from the industry and DTCC, asked the CRA for the one-year postponement in a letter dated December 14, 2011.
From the letter
“SIFMA members maintain sophisticated and comprehensive systems to facilitate systematic withholding on behalf of their investor accounts,” the letter stated. “Although development of applicable compliance procedures is under way to varying degrees at U.S. securities firms, our members believe it would be difficult to complete the necessary testing and implementation in a timely manner to fully comply with the new requirements by January 1, 2012.”
U.S. firms “have tens of thousands of impacted accounts and adequate time is needed to communicate these new requirements to clients as well as allow enough time to receive back the new forms prior to January 1, 2012,” the letter said.
Feedback from customers
DTCC’s Global Tax Services conducted a webinar on the new regulations for more than 135 TaxRelief customers in December, with a CRA representative on hand to answer questions.
“It was clear from the webinar that the industry would not be able to comply with the new regulations by the original date,” said Nardeo Ganesh, DTCC director, Global Tax Services. “Our customers need to have a process in place to collect and validate the new declaration forms, as well as maintain the list of investors. And in this case, we’re speaking of millions of investors.”
Prior to the new regulations, the CRA had generally accepted the use of the investor name and address for determining whether to apply tax treaty benefits. @