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Subject:
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Mandatory Bank Remitting
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This is further to your September 30, 1994 memorandum where you ask if existing provisions of the Excise Tax Act allow for enforcement of mandatory bank remitting requirements. Subsection 227(9) of the Income Tax Act provides for penalties in support of Subsection 153(1) which includes mandatory banking provisions for withholding tax. While the Excise Tax Act does have similar legislation, Section 280 imposes penalty and interest on amounts not remitted when required. It does not, as you have indicated, impose penalty and interest on amounts not remitted as required.
We recognize the lack of enforcement legislation to deal with persons who fail to remit at a bank. We have, accordingly, been seeking legislative changes with the Department of Finance to more closely align our penalty provisions with those contained in Subsection 227(9) of the Income Tax Act. The changes sought also include the ability to apply administrative penalties for failing to remit as required.
In the interim, however, to address your concern about enforcement, failure to comply with mandatory banking requirements may be considered an offense pursuant to Section 329 of the Excise Tax Act. Admittedly, offence provisions requiring a summary conviction are not initially the most appropriate nor the most efficient vehicle by which to encourage compliance. However, until legislative changes are implemented to accommodate the application of administrative penalties, Section 329 is the only measure currently available. As with other offence provisions, a certain amount of discretion may be exercised by the District
Offices before deciding to proceed. This discretion may provide the relief you seek with respect to taxpayers who do not have access to financial institutions in Canada.
Discussions with Taxation regarding their treatment of this situation reveal they have not made special arrangements for either non-residents nor for those persons in remote areas such as the Northwest Territories to accommodate or relieve them of their requirement to remit to a Canadian financial institution. They have existing procedures which enable a case-by-case review of those clients who have failed to remit as or when required. As individual circumstances warrant, such as an inability to comply with statutory requirements, it is expected the Taxation District Offices will utilize the discretion found in Subsection 227(9) of the Income Tax Act and refrain from assessing penalties.
Until alternative arrangements have been made non-residents may continue to send their payments and remittances in the usual manner to the Summerside Tax Centre. Provided the payments/remittances are made on time, no enforcement action should be undertaken by the Department where a nonresident fails to make their remittance or payment of $50,000 or more at a financial institution. In addition, there will be no penalty and interest implications under these circumstances.
Should you have any further questions or require additional information please do not hesitate to contact D. Caron at 952-0301 or M. Boivin at 954-2488.
H.L. Jones
Director
General Tax Policy
GTP 1313
c.c.: D. Caron
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