Deeming Allows SIN Bait-and-Switch by Financial Institutions

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Deeming Allows SIN Bait-and-Switch by Financial Institutions

CRA’s Information Circular 82-2R2 promotes bait-and-switch using your SIN. This results in financial institutions issuing CRA T5 information returns that deem your account income as Canada’s public money. This usually results in you owing income tax.

CRA’s Information Circular 82-2R2 promotes bait-and-switch using your SIN. This results in financial institutions issuing CRA T5 information returns that deem your account income as Canada’s public money. This usually results in you owing income tax.

Summary

CRA’s Information Circular (“IC”) 82-2R2 promotes bait-and-switch using your SIN. This results in financial institutions issuing CRA T5 information returns (slips) that deem your account income as Canada’s public money. This usually results in you owing income tax.

Intent of CRA Information Circulars

CRA’s IC70-1 is titled, ANNOUNCEMENT – INFORMATION CIRCULARS AND INTERPRETATION BULLETINS. It says:

The new Information Circulars will aim at informing the general public regarding procedural matters relating to the Income Tax Act, the Estate Tax Act, and the contribution provisions of the Canada Pension Plan…

We propose IC82-2R2 seems to have very poor aim.

Background

Apu’s Theory proposes CRA’s SIN has two legal meanings. First, having a Social Insurance Number means you agree to be legally liable. Second, accepting a “social insurance number” means you are holding an Income Tax Act (“ ITA”) “office”. Having two legal meanings allows the SIN to be used for a bait-and switch. We discussed previously how Canada’s case law, legal system, and tax laws all allow deeming facts (assumptions). This is how and why IC82-2R2 can tell financial institutions to issue T5 Statement of Investment Income Return (slip) deeming (through a SIN bait-and-switch) you are holding an ITA “office”. Your account’s income then belongs to Canada.

IC82-2R2 – Introduction

CRA’s IC82-2R2 is titled, SOCIAL INSURANCE NUMBER LEGISLATION THAT RELATES TO THE PREPARATION OF INFORMATION SLIPS. Paragraph 1 says,

This information circular explains how, under the Income Tax Act, information slip preparers have to ask for and report social insurance numbers (SINs) on information slips.

Starting January 2017, you can report T5 information returns via the Internet. You can still file paper T5 information slips, but moving to Internet reporting means CRA now prefers using the term information return.

IC82-2R2 – Legislative Requirement

IC82-2R2, paragraph 3, says,

Subsection 237(l) of the Act requires individuals who reside or are employed in Canada to give their SIN, upon request, to their information slip preparers. Those people without a SIN have to apply for one at the nearest Canada Employment Centre within 15 days of the date their information slip preparers ask for it. When these persons receive their SIN, they then have 15 days to give it to their information slip preparers. Those people who do not do so can be charged a penalty of $100 for each failure, under subsection 162(6) of the Act.

From earlier, IC82-2R2, paragraph 1, says SIN means “social insurance number”. However, ITA s.237(1) actually says

Every individual (other than a trust) who was resident or employed in Canada at any time in a taxation year and who files a return of income under Part I for the year, or in respect of whom an information return is to be made by a person pursuant to a regulation made under paragraph 221(1)(d), shall,

(a) on or before the first day of February of the year immediately following the year for which the return of income is filed, or

(b) within 15 days after the individual is requested by the person to provide his Social Insurance Number,

apply to the Canada Employment Insurance Commission in prescribed form and manner for the assignment to the individual of a Social Insurance Number unless the individual has previously been assigned, or made application to be assigned, a Social Insurance Number.

Clearly, ITA s.237(l) refers to the SIN as a Social Insurance Number and not as a “social insurance number”. Applying for a SIN at Canada Employment Insurance Commission is also for a Social Insurance Number. [ref] Apu’s Theory, Chapter 9 documents how the EI Act uses the SIN as a Social Insurance Number 5 times, but “social insurance number” 0 times.[/ref] In addition, ITA s.237(1)(b) states giving your Social Insurance Number to your information slip preparers. [ref] Apu’s Theory, Chapter 9 documents how the ITA uses the SIN as a Social Insurance Number 30 times, but “social insurance number” 0 times.[/ref] So how and why does IC82-2R2 promote the bait-and-switch by using the SIN as a “social insurance number” on your T5?

Deeming Allows SIN Bait-and-Switch

In a previous article we proposed how Canada’s case law, legal procedure, and statutes all allow deeming you as holding an ITA “office”. Your income’s status then becomes Canada’s “public money”. Therefore, when IC82-2R2 refers to “you”, it probably means you holding an ITA “office” (as an ITA “officer”). This fits with the T5, Box 22 asking for your “social insurance number”. [ref]Apu’s Theory concludes that the “social insurance number” identifies you holding an ITA “office”. [/ref] This also fits with the T5 asking for the recipient’s last name. Artificial persons, such as officers [ref]The Canada Pension Plan “officer” is the same as the EI Act “officer” and the ITA “officer”. You represent a sole office.[/ref]on CRA’s CPT100 form, usually have last names. Individuals who are not holding an ITA office, such as on CRA’s CPT1 form, have surnames or family names. The SIN bait-and-switch changes your income’s status, and also your status.

T4015 – T5 Guide (on Residents of Canada)

Page 2 of CRA’s T4015 T5 Guide says,

If you make certain investment income payments to a resident of Canada, or if you receive certain investment income payments as a nominee or agent for a person resident in Canada, you have to prepare a T5 information return.

Deeming Allows Jurisdictional Bait-and-Switch?

Since income is a “property and civil right within the province” (BNA Act, s.92(13)), Apu’s Theory concludes income tax is on the ITA “officer”, a federal entity that you represent if you choose. Therefore, resident of Canada” probably refers to the federal ITA “officer”. (“Resident” is Latin for ‘thing identified’).

Deeming – Summary

All this means IC82-2R2 can tell financial institutions to use the nine digits of your Social Insurance Number, but on your officer’s T5 as a “social insurance number”. As their client, your T5 deems your ITA “officer” is receiving investment profit and capital gains.

Interpretation Circulars Lack Legal Authority

CRA Information Circulars lack any legal authority. They never promised to inform the general public. CRA only aimed (tried) to inform you. In addition, they rely on you not reading what the law actually says. Finally, CRA’s website does not make IC82-2R2 available as a text file or PDF. This discourages you from downloading (and studying) it.

Conclusion

Information Circulars “aim at informing the general public”. It seems IC82-2R2’s aim is very poor. Instead, they aimed at deeming your account’s income status via a SIN bait-and-switch. This results in financial institutions filling out your T5 information return so your account income is deemed for the ITA “officer”, is deemed Canada’s “public money”, and is deemed taxable income.

But did you really intend to turn your private property over to Canada? We saw earlier that ITA s.237(1) , like not filling out a TD1, also has no mandatory penalties. How odd. Furthermore, the ITA does not have legal definitions for ‘information return’ or for ‘information slip’. Does all this suggest a choice? And why does CRA not have a form for reporting profit from private property investment income?

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