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Why have prosecution provisions?
Prosecution provisions are required to ensure compliance with the FIF record keeping measures. These provisions generally correspond with the prosecution provisions of the CFC measures. However, you cannot be prosecuted for failing to keep records before 18 December 1992.
A maximum penalty of $3,000 may be imposed by the court if you are convicted of a breach of the record keeping requirements. [SECTION 621]
If you are prosecuted for failing to keep records of underlying accounts and accounting records in relation to the calculation method, you may rely, in certain circumstances, on a statutory defence. The defence will apply if you made reasonable efforts to obtain the required documents but were unable to get them. [SECTION 623]
If you do not have access to full information relating to a FIF, do not use the calculation method. You must keep records of the information on which you based your calculation of FIF income. However, section 623 is intended to apply if you had access to the information provided by the FIF or a third party but, due to a change in circumstances, do not have sufficient control to access the underlying accounts of the FIF after making reasonable attempts to do so. You would not be expected to use this defence unless exceptional circumstances existed.
A partnership will be treated as a person under the record keeping provisions. This allows the record keeping and related prosecution provisions to apply to the partnership. Accordingly, an offence committed by the partnership is treated as having been committed by each of the partners. [SUBSECTIONS 624 (1) and (2)]
However, a partner prosecuted for such an offence may have a defence where it can be proved they were not knowingly involved in any way in the commission of the offence. [SUBSECTION 624(3)]
Last modified: 08 Jun 2005QC 27386