The Lawyers Weekly - May 18, 2012

THE LAWYERS WEEKLY
May 18, 2012 | 21

BUSINESS
CAREERS

Double tax treaties typically contain provisions for exchange of information. The precise language depends upon whether the treaty partners use the OECD or the UN model as the starting point. Each of the models has protective and procedural safeguards, but with substantial variations because of the constitutional structure of each country.

Canada and the United States, which follow the OECD model, have agreed to co-operate in their attempts to deal with avoidance or evasion of their respective taxes. The Canada-U.S. treaty has broad powers that are necessary to prevent fraud and properly administer fiscal statutes. Article XVII enables each country to obtain relevant information so that they can properly administer their taxes.

VERN
KRISHNA

The type of information that the two countries can exchange is much broader than the scope of Article I of the Canada-U.S. treaty. For example, the two countries can exchange information on persons that the treaty does not cover or who do not even reside in either country.

The exchange rules apply to all taxes. This includes Canadian excise taxes, U.S. taxes on estates and gifts, taxes under the Internal Revenue Code and social security and excise taxes, as well as income taxes.

The countries must treat any information they exchange in the same manner as it is treated under domestic laws. They may, however, disclose the information to persons who assess, collect or administer taxes and to those involved in tax litigation.

Legislative bodies and their agents who administer taxes can also access any information that they consider necessary to carry out their oversight responsibilities. Such bodies and agencies, however, can use the information only for the purposes of administering taxes.

Neither country need supply information that would disclose a trade secret or the disclosure of which would be contrary to public policy.

Article XXVII protects any
information that Canada receives
in confidence from the Internal
Revenue Service. However, the
treaty does not consider informa-
tion as secret unless it contains
information that Canada receives
in confidence, the contents of
which would be revealed by the
disclosure of the Canadian infor-
mation. Therefore, Canadian
information may be available in
accordance with the applicable
domestic law governing confi-
dential information, such as the
Income Tax Act or the Access to
Information Act. Under the
domestic law of the United States,
any information exchanged pur-
suant to a tax convention is pro-
tected from disclosure.

ANNOUNCEMENTS

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