The Investment Industry Association of Canada (IIAC) is calling on Parliament to pass a bill that features measures designed to implement the provisions of new U.S. tax reporting law known as the Foreign Account Tax Compliance Act (FATCA).

IIAC president and CEO, Ian Russell, appeared before the House Standing Committee on Finance by videoconference on Tuesday, and called on the members of the committee to recommend approval of Bill C-31 at soon as possible.

Russell warned that a delay in the legislation could harm the investment industry and investors, as any failure to comply with the new U.S. regime could lead to punitive U.S. withholding taxes and possibly even the closure of Canadian accounts in the United States.

“Simply put, deferral of the Canadian legislative package this close to the July 1, 2014 implementation deadline would place a more costly and difficult compliance burden on Canada’s investment industry and expose Canadian financial institutions and investors to penalties and sanctions that would severely impede access to the U.S. marketplace,” he said.

The IIAC notes that it has been working with other trade groups and financial institutions and in consultations with both Canadian and U.S. tax authorities to develop the reporting framework that’s enshrined in the bill.

Building on the existing Canadian-U.S. information-sharing tax protocols, the bill includes: exemptions from the reporting obligations for registered accounts that are considered a low risk for tax evasion (such as RRSPs, RRIFs, TFSAs, RESPs and RDSPs); phased-in reporting rules; and, an intergovernmental approach to implementation.

Russell said that the proposed bill “embeds the best possible tax-reporting framework for Canadian investors and their investment dealers, and should be passed expeditiously.”