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Finance Canada looking to tax “idle” bank accounts

In order to deal with massive debt accumulated over the last 3 years, the government is looking for another cash grab wherever they can find it.

The Department of Finance is looking to seize unclaimed bank accounts, according to a recent proposal.

The plan from the government is to convert unclaimed accounts into a holding entity where the funds would be held for a period much shorter than the current grace period, then convert into revenue for the government.

The government claims the administrative costs of alerting people that they may have money in idle bank accounts may be more than the amount in those accounts, and therefore, many people with small claims may not be given the chance to have their money returned.

According to CBC, the Bank of Canada had $742 million in accounts waiting to be claimed in 2017 — money the federal government is itching to get its hands on.

The current laws make banks hand over unclaimed accounts to the Bank of Canada for safekeeping after a period of years.

Owners have 30 years to claim smaller bank accounts (less than $1,000) and 100 years to claim larger accounts (over $1,000).

But the proposal suggests new rules that would seriously limit Canadians’ right to recover assets that have gone idle in the past.

The Bank of Canada currently has a database for claiming these accounts, which allows Canadians to locate their hard-earned money. But the federal government is now signalling it wants to close these accounts and take the money for themselves. So, what will happen to the money?

According to the MaRS Centre for Impact Investing, an organization partially funded by the government who were interviewed by the CBC, Canada should invest the unclaimed money into “socially responsible funds that support the public good.”

If this approach was taken, the government may spend the money they seize from people’s idle bank accounts in whatever way they deem to be “socially responsible” — without consent.

For now, however, the money will be shown as “revenue” for the government.

In order to deal with massive debt accumulated over the last 3 years, the government is looking for another cash grab wherever they can find it.

One accountant interviewed by the CBC condemned the government for not doing more to help Canadians collect on forgotten money.

“It’s very un-Canadian for us not to help Canadians find unclaimed property balances when nobody loses their money on purpose,” said Brenda Potter Phelan, an Ontario-based accountant.

“It’s usually the result of an accident, a death. Increased longevity brings forgetfulness.”

Which raises the question, does the government try to locate the owners of these accounts?

The proposal does not give any details about the process.

One reason accounts might go unclaimed is that the owner has died and the next of kin is not aware of the account.

When the new rules come into place, many beneficiaries may find that the government took their inheritance without their knowledge and without making efforts to notify the family of the bank account.

This is theft, by any other name.

The proposal has now passed the consultation stage and is in the hands of the Department of Finance for the final decision.

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