IIAC ALSO RECOMMENDS CRA ABANDON ITS DISCRETIONARY BENEFICIARY POSITION
The CRA requires a financial institution (FI) to have, in relation to financial accounts of a trust, procedures in place to be notified when a distribution is made to a discretionary beneficiary. The IIAC recommended that the CRA abandon the Discretionary Beneficiary Position (DBP) in the next version of the FATCA Guidance and the CRS Guidance. The DBP is contrary to law (as it imposes obligations on FIs that are not required by the Income Tax Act and the Canada-U.S. intergovernmental agreement under the Convention Between United States of America and Canada) and cannot be justified from a cost versus benefit analysis. In the alternative, the IIAC recommended that the CRA provide a transition period during which penalties will not be applied against FIs that are not yet compliant with the DBP. Click here to read our recommendation to CRA. Thank you to Borden, Ladner Gervais, LLP for their assistance.