Information & Ethics Committee on April 14th, 2016

[Daniel Therrien]

From a privacy perspective, there's no question that clarity would be be extremely desirable here. If I can speculate on how we got where we are, I would go back to the fact that the purpose of the agreement is to avoid tax evasion, and it may be that tax evasion will occur for accounts under $50,000. That's possible, so an agreement was negotiated between Canada and the U.S., and the sum total of the agreement and the Income Tax Act is unclear. From a privacy perspective, that's highly undesirable, because citizens do not know, if they have accounts totalling less than $50,000, whether their personal information will be transferred or not to the CRA and, ultimately, to the IRS. From that perspective, clarity would be extremely desirable.

[Bob Bratina, Liberal, Hamilton East—Stoney Creek, ON]

Thank you.

It baffles me that we have so many resources within the government, yet we constantly have to review. That's what we're doing here to achieve a better outcome. We hear from other jurisdictions that seem to have solved some of these problems.

I have to go back to the fact that just simply having another third party determine whether something is reportable or not should be a simple matter, especially in view of so many of the financial scandals that have occurred around the world and so on. You may not need to answer this, but wouldn't it seem to you to be a simple matter to review the information and apply the correct remedies in terms of the wording so that we don't have to sit here and have these discussions at this level?

[Daniel Therrien]

I don't have anything more to say.

[The Chair, Conservative, Blaine Calkins]

There are still two and a half minutes.

Go ahead, Mr. Saini.

[Raj Saini, Liberal, Kitchener Centre, ON]

Mr. Therrien, I have a quick question for you. So far this morning we've concentrated on individual personal accounts, but the FATCA also includes commercial accounts for commercial enterprises. Because that information is also privy to the agreement, in your estimation, do you feel that commercial information that is sent to the United States would be secure? Do you think that's the proper route, or should there be some other provision made for those accounts that are business accounts or commercial accounts?

[Daniel Therrien]

I'm afraid that goes beyond the scope of my jurisdiction. Commercial information is not information about individuals. The jurisdiction I have is to look at the personal information of individuals in Canada.

[Raj Saini, Liberal, Kitchener Centre, ON]

What is your opinion?

[Daniel Therrien]

Obviously, there should be rules to ensure the safety of the information, whether it's commercial or personal information.

[The Chair, Conservative, Blaine Calkins]

Mr. Lightbound is next.

[Joël Lightbound, Liberal, Louis-Hébert, QC]

One question I asked the minister earlier is her assessment of the risk for Canadians who are not in any way, shape, or form linked to the U.S. to be caught up in that agreement. What's your assessment of that?

[Daniel Therrien]

I think that's a tax policy question at the end of the day. Certainly from a privacy perspective, the fact that information is shared with the U.S. is an exception to the rule, but the exception to the rule is justified by the desirability of avoiding tax evasion. In terms of privacy, what I expect is for the objective to be clear and legitimate.

Avoiding tax evasion is legitimate. How do you define the information that will be shared with the U.S. for that purpose? A certain choice was made. You've heard from the minister and officials on the fact that there was some negotiation with the Americans on what information would not be sent to the U.S. government despite the general objective. I note that according to the rules and the compromise reached, there are people whose link to the United States is, I would say, tenuous, such as people who are dual citizens, citizens of Canada and of the U.S. whose U.S. citizenship may be due to their parents. They may never have worked in the U.S. You can imagine the number of circumstances in which the link of a U.S. citizen subject to this reporting requirement is tenuous.

From a privacy perspective, once the agreement is reached, it's all right for the information to be shared with the U.S. Would it be desirable that a different agreement had been reached? Probably, but this is the agreement we have.

[The Chair, Conservative, Blaine Calkins]

Thank you very much.

We've gone upwards of eight minutes in that round. We now move to the five-minute rounds and Mr. Jeneroux. We only have about 15 minutes left. If we can get through these relatively quickly, we can make sure that every party has an opportunity to ask a question.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I guess that's my first question to you, Mr. Chair. We're quickly encroaching on our time towards the end of the committee. In the last committee meeting we also went right to the end. I'm hoping that we still have some time at the end. Is that the plan?

[The Chair, Conservative, Blaine Calkins]

The clerk has asked me for a few minutes at the end to get some motions from the committee. There is some committee business that we have to do. I suggest that if we have useful questions, we ask them, and if we don't have useful questions, we should wrap it up as quickly as possible. I'll leave it up to your discretion whether or not the questions are useful.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

All right. I have some very useful questions, Mr. Chair.

I honestly have just a quick question for clarification. September 30, 2016, is the next transfer of records between the IRS and the CRA. Some of the concerns that were raised here are that a number of Canadians whose banking records were transferred were not notified. Is that possible at all between now and that date? Do you see it as being possible to notify these Canadians, or is the current legislation such that there's not a chance that they'll be notified?

[Daniel Therrien]

I would distinguish between two stages in this information sharing.

Normally, in terms of privacy, the information that a government institution receives should be directly from the individual concerned. Here, there is an intermediary, which is the financial institution, but that is provided for under the arrangement and the agreement. Although an exception to the general rule, it is an exception that is authorized by law. Should information on funds owned by a U.S. person be collected by somebody other than a U.S. person? By law, the answer is yes, it can be collected from a financial institution.

The question that was asked earlier this morning was this: assuming this regime, should the CRA inform the individuals in question that their information has been shared with the IRS? I think there is no reason why not. What we heard is that under access to information provisions, if somebody makes an access request, he or she will be entitled to that information, and that is absolutely true. If that is true, then why not provide a mechanism that provides for more systematic information being given to individuals?

[The Chair, Conservative, Blaine Calkins]

Mr. Kelly, do you have anything? There is a bit of time left.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Keep it moving.

[The Chair, Conservative, Blaine Calkins]

I am going to keep it moving, then.

We'll go back to the Liberals. Is there anybody here who has any questions?

No? We're good.

Is there anybody from the NDP who has any questions?

Mr. Dusseault, go ahead.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I wanted to come back to automatic disclosure.

We asked the minister and the officials for clarification through a question in the order paper. The only answer we got was that concerned Canadians should already be aware of this because their banks should have informed them. We were told that if people needed more information, they could consult the FAQs on the Canada Revenue Agency website. We were also told that one of the only ways for Canadians to obtain information and have access to their file was by making a request directly to the agency.

We think that Canadians are fully justified in having access to their personal file.

Do you think it would be possible to put in place a mechanism that would automatically inform the people concerned that information about them had been sent to a foreign government? I'm talking about a foreign government because, in a case like this, it's important to know.

Is that possible? Currently, there are 155,000 files, but there might be 200,000 by September 30, 2016. We don't know. Is it reasonable to do that?

[Daniel Therrien]

It's a matter of discretion. The agency is not required to do anything other than what it did, meaning, to inform the population in general through its website and to respond to access requests under the Privacy Act. The agency meets the minimal requirements of the act.

Would it be possible? That certainly requires some effort, but we know that the government wants to make it easy for Canadians to obtain access to information. It's something that might fit in with this objective.

Is it easy to institute, technically speaking? You'd have to speak to the Canada Revenue Agency about it. I imagine that there are electronic ways so that once the information is sent, the agency could inform the individual concerned without it being too complicated. The matter should be studied in more detail.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Could you confirm that you will provide the committee with a written submission on the legal protections of Canadians in the United States? As mentioned, there have been privacy breaches in the United States. Files have been hacked.

We would like to see you again to find out about the recourse for Canadians whose file might have been compromised.

[Daniel Therrien]

Absolutely.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

Mr. Chair, does Mr. Boulerice have time to ask any questions?

[The Chair, Conservative, Blaine Calkins]

We are pretty much right there, Mr. Dusseault, as far as the three minutes are concerned.

I am just going to ask one point of clarification from the commissioner.

Commissioner, you said that because of the discrepancy in the $50,000, there was a concern that there might be over-reporting. However, that same discrepancy might also result in under-reporting, would you not agree?