Submissions Received by the Task Force

Full Submission

From: Canadian Bankers Association
Sent: September 19, 2001

Issue

The CBA has a number of concerns with the ATIP legislation as it is now interpreted. In particular, notwithstanding Section 241 of the Income Tax Act, the ATIP legislation does not protect the release of confidential taxpayer information, nor does it prevent the dissemination of factually incorrect information.

Background

Perhaps the best way of outlining our concerns with this legislation is to provide you with the CBA's recent experience with ATIP.

The Canadian Customs and Revenue Agency (CCRA) released into the public domain a draft of an Internal CCRA Compliance Branch and Audit Directorate report entitled: Financial Sector Analysis Risk Assessment and Managing Risks (the "Draft Report") -December 2000. This report looks at taxes paid in relation to profits earned in the financial services sector.

CBA members had a number of concerns about both the content and the release of this Draft Report. In particular, the Draft Report (by its own admission) contains incomplete and inaccurate information, and makes sweeping conclusions about the banking industry. On this particular issue, the CBA pointed out to the CCRA a number of deficiencies with their Draft Report. The research and methodology are questionable. In several places throughout the Draft Report, the CCRA points to the problems with the data used to compile this information. The Draft Report covers the financial services sector as a whole, including the insurance industry (not just the banking sector), so the conclusions made can not be drawn about the banking industry alone. Further, the CCRA report covers the tax years of 1996, 1997 and 1998, and does not consider major factors, such as the Asian crisis and the Ice Storm, which occurred during that period which may have temporarily resulted in a decline in tax revenue. It also does not consider that after 1998, the level of taxes paid increased and even exceeded 1996 levels. Finally, the report makes use of clip-art images and loaded language to underscore unconfirmed conclusions.

We understand that, aside from the media journalist who obtained access to the Draft Report through ATI P, a number of other government officials have requested copies of the report for their own policy work. The CBA obviously takes issue with ATIP for allowing the dissemination of unconfirmed information into the public domain, which will obviously have unfair repercussions for the banking industry.

The second, and perhaps much more important issue, is with respect to the release of confidential individual taxpayer information into the public domain.

The CCRA Draft Report contains confidential information about individual taxpaying financial institutions and, although the specific names of these institutions were blanked out prior to the release of the Draft Report to the media, an informed person could quite easily deduce which institution is being referred to.

We understand the legislated provisions for releasing information through the ATIP, however, the CBA has a concern as to whether the CCRA was vigilant enough in protecting the actual identity of the banks.

The CBA has met with staff in the office of the Minister "of National Revenue and other CCRA officials to discuss the CBA's concerns. We understand that the CCRA acknowledged that more could have been done to protect information, and that it was agreed that any release of further successive drafts of this report would be edited more vigorously in order to protect privacy. Unfortunately, the damage has already been done with the release of the Draft Report.

Conclusions and Recommendations

Once an ATIP information request is made of the government, as in the case with the CCRA Draft Report, the government is at that point in the unenviable position of writing reports for the public/media, and as a result, has to be much more cognizant about using unconfirmed data, sweeping conclusions and clip-art images. They also have to be much more cognizant about releasing confidential information into the public domain.

The CBA does not dispute the right of Canadians to have access to government information, but this right has to be balanced by the need to ensure that rights to privacy are not breached, and that the information being released is indeed confirmed factually correct. Therefore, the CBA makes the following recommendations to your Committee in an effort to ensure that this balance is achieved.

• When releasing any draft material into the public domain through ATIP, that draft material must be confirmed as empirically correct. Any unconfirmed data should be exempted from release. This will prevent the dissemination of misinformation to the public.
  
  
• The government should develop a "threshold test" to determine whether groupings of confidential information are suitable for release into the public domain. This would ensure that industries in Canada, such as the banking community and the steel industry, which have a limited number of dominant players, have their legal privacy rights safeguarded.
  
  
• As a "third party" we would also recommend being given the courtesy of notification when such reports are being considered for release to the public under ATIP provisions. The government should develop a formal process to ensure that the banks have the opportunity to review any subsequent drafts of this report and object to the inclusion of any information which they regard as confidential or misleading.

Submissions Received by the Task Force