SUBJECT: SOCIAL INSURANCE NUMBER LEGISLATION THAT RELATES TO THE PREPARATION OF INFORMATION SLIPS NO: 82-2R2 DATE: November 20, 1992 REFERENCE: Subsections 162(5), 162(6), 221(1), 237(1), 237(2) and 239(2.3) as well as Parts II and XXXVIII of the Income Tax Regulations This circular cancels and replaces Information Circular 82-2R, dated February 28, 1990. Introduction 1. 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. Information slip preparers are, by law, responsible for preparing information slips even if agents of the slip preparers actually prepare them. This circular also explains the requirements for individuals (other than trusts) to supply their SIN. Exemptions 2. The SIN of children under 18 years old is not required if their total annual income is expected to be $2,500 or less. Corporations and partnerships have their own distinctive identification numbers. Trusts under subsection 104(1) of the Act are exempt from the SIN requirements. Legislative Requirement 3. 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. What do information slip preparers have to do? 4. Subsection 237(2) of the Act requires information slip preparers to make a reasonable effort to get the SIN of the clients for whom they are preparing information slips. Preparers are also liable to a $100 penalty under subsection 162(5) of the Act each time they do not show a SIN on an information slip, unless they make a reasonable effort to get the SIN. 5. Information slip preparers have to ask their clients to give their SIN and other personal data, such as their name and address. This request can take any form that is practical for the preparers. 6. Information slip preparers have to ask for the SIN each time they prepare an information return. Special cases Paragraphs 8 to 11 that follow do not apply to employers who prepare T4 or T4A information slips. Employers have to request a SIN from each employee in all cases, and inform Revenue Canada, Taxation accordingly. 7. For deceased persons, information slips are usually prepared in the name of the estate, for example, "The estate of ...". The income that has accumulated up to the date of death would normally be reported on the final tax return. Therefore, preparers should report the SIN on the information slips they are preparing for the year of the deceased person's of death. Information slips prepared for estates after the year the individuals have died do not need a deceased's SIN. Neither do information slips for funds distributed out of estates after the year of death. Information slips for funds distributed out of estates need the SIN of the beneficiaries. See paragraph 2 for exemptions. 8. Parents often set up trust accounts into which they deposit funds for their children. If the accounts qualify as trusts under subsection 104(1) of the Income Tax Act, the law does not require a SIN for the children (subsection 237(1)). However, if there are no trust deeds and if the depositors can withdraw the finds at any time, information slip preparers have to report the children's SIN unless these children are under 18 years old and are expected to have a annual income of $2,500 or less. 9. For joint beneficiaries, slip preparers have to enter the SIN of only one of the beneficiaries. However, they should consult the applicable guide fro instructions or whether to enter the names of all beneficiaries in the recipient's name and address area. Keeping records of requests 10. Information slip preparers should keep any documents they need to prove they made a reasonable effort to get their clients' SIN. For example, when they send a request by mail, the preparers should keep a record of the date of the request, an example of the request form, and the names of the people contacted (e.g., shareholders of record at the date of the request, members of a co-operative or holders of deposit accounts). 11. If clients do not respond to a SIN request, information slip preparers should not delay filing the information returns after they are due. If their clients' SIN are not available, information slip preparers should leave the SIN area of the slip blank. Use of SINs 12. An individual's SIN in the possession of Revenue Canada, Taxation, is protected under the Privacy Act, as well as the confidentiality provisions of the Income Tax Act. 13. Subsection 239(2.3) provides that any person who has to prepare an information return cannot knowingly use, communicate, or allow an individual's SIN to be communicated, other that as required or authorized by law, or for a purpose for which it was provided by the individual.