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In article <806@mprvaxa.UUCP> acton@mprvaxa.UUCP (Don Acton) writes:
>>Chris Lewis remarks (in an extremely informative posting) that you don't
>>need a SIN to open a bank account. I'm afraid that this statement is
>>incorrect: the Tax Act requires that banks report interest on accounts (and
>>therefore a SIN is required). 

The Income Tax Act requires a social insurance number solely for
the purpose of filing an income tax return (s. 237 and Regulation 3800).

Regulation 201(1)(b), however, requires that "Every person who makes
a payment to a resident of Canada as or on account of ... interest...
shall file an information return in prescribed form...". The prescribed
form is the T-5, which has a slot for the taxpayer's SIN. In practice
this appears to be a back door to requiring that persons opening bank
accounts give the bank their SIN, in order for the bank to be able
to comply with the Regulation.

>When I worked in a bank you didn't need a SIN number to open an interest
>bearing account. However, when it came time to pay the interest they
>would withhold the maximum amount that might possibly have to be paid in income
>tax. 

Not exactly, since there's no withholding in Canada on investment income
paid to residents of Canada. I don't see anything in the Income
Tax Act or Regulations which justifies quite what you said. I
suspect the justification may be that if the individual has not provided
a SIN he may not be a resident of Canada (though the two groups are
obviously overlapping sets), and therefore that the bank may be required
to withhold under ITA ss.212(1)(b) and 215(1). The non-resident
withholding tax on interest is 25%, reduced by treaty in many cases.

I'd be interested in hearing more specifics about what your bank
did, if you remember them.

>	I think a certain amount of interest had to be earned before this
>rule applied (> 50?). 

The T-5 is generally not issued if total interest income for the year
is under a certain amount. It used to be $50 but I believe may now be $100.
I can't find anything in the Regulations to support this; it's likely
just a Revenue Canada administrative practice.

Incidentally, anyone interested in learning about the Canadian
income tax system through CAI should drop me a line. We have
a complete course here, used for the Bar Admission Course,
which takes 10-20 hours. The first few lessons would be of interest
to individuals in general. Cost is $12 per hour of access (includes
Datapac access for those outside Toronto).

Dave Sherman
The Law Society of Upper Canada
Toronto
(416) 947-3466
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