Vol. 134, No. 41 — October 7, 2000

Regulations Amending the Income Tax Regulations (Drought Regions)

Statutory Authority

Income Tax Act

Sponsoring Department

Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Section 80.3 of the Income Tax Act permits farmers who dispose of animals in their breeding herds due to drought conditions existing in a prescribed drought region in a year to exclude a portion of the sale proceeds from their taxable income until the following year, or the year following a consecutive series of drought years, as the case may be. As a result, the full amount of the proceeds eligible for the deferral will be available to replenish their herds at that time.

Prescribed drought regions are those regions of Canada that are designated, on the advice of the Minister of Agriculture and Agri-food, as suffering from drought conditions during a year. This regulation, which amends section 7305 of the Income Tax Regulations (Regulations), prescribes the regions which are eligible drought regions for 1999. It also introduces section 7305.01, which ensures that lands that are surrounded by prescribed regions are also considered to be prescribed regardless of the municipal status of those lands. It is relieving in nature and applies retroactively.

Alternatives

This regulation is necessary to prescribe eligible drought regions for 1999. The regions prescribed for 1999 were determined by the Minister of Agriculture and Agri-Food to have suffered from drought conditions in that year. The other amendment made by this regulation provides a clarification of the Regulations with respect to drought regions.

Benefits and Costs

This regulation will allow farmers in the prescribed drought regions to defer the tax payable on sales of breeding animals in a year until a subsequent year. The portion of the sale proceeds, which can be deferred by a farmer, increases with the percentage of his or her herd which has been sold. In this manner, the tax deferral program is targeted at those farmers most severely disadvantaged by drought conditions.

Consultation

This list of prescribed regions was developed through consultations held by Agriculture and Agri-Food Canada with various parties, including provincial agriculture departments, farmers' association, and crop insurers.

In addition, Canadians were given an opportunity to comment on the regions to be prescribed for 1999 following the publication, by Agriculture and Agri-Food Canada, of initial lists of drought regions on November 16, 1999, and of a final list on March 10, 2000. No comments were received from the public with respect to the final list.

Compliance and Enforcement

The Income Tax Act provides the necessary compliance mechanisms for Regulation 7305. These mechanisms allow the Minister of National Revenue to assess and reassess tax payable, conduct audits and seize relevant records and documents.

Contact

Kerry Harnish, Tax Legislation Division, Department of Finance, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario K1A 0G5, (613) 992-4385.

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 221(see footnote a) of the Income Tax Act(see footnote b), proposes to make the annexed Regulations Amending the Income Tax Regulations (Drought Regions).

Interested person may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Kerry Harnish, Tax Policy Officer, Tax Legislation Division, Tax Policy Branch, Department of Finance, L'Esplanade Laurier Building, 17^th Floor, East Tower, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.

Ottawa, October 4, 2000.

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE INCOME TAX REGULATIONS (DROUGHT REGIONS)

AMENDMENTS

1. Section 7305 the Income Tax Regulations(see footnote 1) is amended by deleting the word "and" at the end of paragraph (b), by adding the word "and" at the end of paragraph (c) and by adding the following after paragraph (c):

(d) the 1999 calendar year are

2. The Regulations are amended by adding the following after section 7305:

7305.01 For the purposes of subsection 80.3(4) of the Act, the prescribed drought regions in respect of a year include any particular area that is surrounded by a region or regions prescribed under section 7305 in respect of the year.

APPLICATION

3. Section 1 applies after 1998.

4. Section 2 applies after 1987.

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Regulations Specifying Investigative Bodies

Statutory Authority

Personal Information Protection and Electronic Documents Act

Sponsoring Department

Department of Industry

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Part 1 of the Personal Information Protection and Electronic Documents Act (the Act) establishes rules to govern the collection, use and disclosure of personal information by organizations in the course of commercial activity. The legislation requires an organization, which is disclosing personal information, to obtain the individual's consent in most circumstances. An exception to this rule is found in paragraphs 7(3)(d) and (h.2) of Part 1 of the Act which permit the disclosure of personal information to and by a private investigative body, without the knowledge or consent of the individual, if the investigative body is specified by the Regulations. The purpose of these Regulations is to name the investigative bodies for the purposes of paragraph 7(3)(d) or (h.2) of Part 1 of the Act.

Increasingly, many fraud investigations are initially launched by private sector organizations (e.g., a bank or insurance company) by way of an independent, non-governmental investigative body. Should the investigative body's preliminary investigation reveal grounds for suspecting that a fraud has been committed or a law contravened, the organization will then turn the findings over to a police or other enforcement agency for further action. Paragraph 7(3)(d) allows an organization to disclose personal information, without the consent of the individual, to the appropriate private sector investigative body in order to conduct the preliminary investigation. The disclosure is circumscribed as it must be a reasonable disclosure related to investigations of breaches of agreements or contraventions of the law. Paragraph 7(3)(h.2) allows an investigative body to disclose personal information back to the client organization on whose behalf it is conducting the investigation.

Paragraph 7(3)(h.2) completes the exception provided in paragraph 7(1)(b) for collection without consent for the purposes of the prevention of fraud by extending it to disclosure. Collection alone would be of limited use to those combatting fraud, unless the information could be disclosed to the parties that need the information. However, without paragraph 7(3)(h.2), the flow of information could only go in one direction — from the organization to the investigative body. The investigative body would be unable to disclose the results of its investigation back to the client organization without consent.

The ability to exchange personal information between private organizations without consent for investigative purposes is the only exception granted to these organizations by the Regulations. Organizations and investigative bodies which exchange personal information will remain responsible for compliance with all other requirements of the Act for this information, and will be subject to oversight by the Privacy Commissioner of Canada and the ability of individuals to seek redress in the Federal Court of Canada.

During the preparation of these Regulations, Industry Canada developed a set of criteria that would be used in the assessment of candidates for investigative bodies. These criteria were intended to cover privacy concerns associated with allowing organizations to disclose personal information without consent for investigative purposes. All of the criteria would not necessarily be applicable to each investigative body. The criteria were based on the following considerations:

— The specific contraventions of law or breaches of agreements against which the investigative activities are directed;

— The specific personal data elements which are disclosed by other organizations to the body; the specific personal data elements which flow back to the organizations from the body; the uses and disclosures made of the information by the body; whether audit trails are maintained; the length of time the information is kept; and the security standards and practices in place for retention and disposal of the information;

— Whether the operational structure of the body or process is fully documented and formalized and the authority, responsibility and accountability centres are identified;

— Whether there are specific legal regime, licensing requirement, regulation or oversight mechanisms to which it is subject and whether sanctions or penalties for non-compliance exist;

— The privacy protection policies and procedures, such as a privacy code, followed by the body. The extent to which the policies and procedures comply with Part 1 of the Act;

— The extent to which the investigative body is independent from the association of members or client organizations that it serves;

— The extent to which all alternative methods of complying with the Act, such as contract or consent, have been exhausted; and

— The amount of information provided to individuals about the existence and operation of the body and about how to make a complaint or seek redress.

Part 1 of the Act will be implemented in two stages. On January 1, 2001, it will apply to the personal information of the customers and employees of the federally regulated private sector, including telephone and transportation companies, broadcasters and banks. It will also apply to organizations that sell personal information across provincial borders, e.g., companies selling or renting mailing lists. On January 1, 2004, the Act will apply to all personal information collected, used or disclosed in the course of commercial activity. Due to the phased introduction of the legislation and the fact that it is new to the private sector, it is expected that additions to the list of investigative bodies in the Regulations may be necessary. For this reason, the Department will continue to consider applications on a case-by-case basis in the future.

Of the organizations which submitted information to Industry Canada describing their internal structure and investigative process, those listed satisfied the criteria on the basis of the documentation submitted. Copies of their submissions may be obtained by contacting Industry Canada or by visiting the Electronic Commerce Web site at: http://e-com.ic.gc.ca/english/privacy/ 632d1.html.

Alternatives

The legislative framework in Part 1 of the Act requires that an investigative body, for the purposes of paragraph 7(3)(d) or (h.2) of the Act, be specified by the Regulations. There are no alternatives to deal with the collection, use and disclosure of this information without consent.

Benefits and Costs

Benefits

Insurance fraud is estimated to cost the property and casualty insurance industry $1.3 billion annually. Credit and debit card fraud, robbery, and counterfeit payments are estimated to cost the banking industry $250 million annually (additional losses related to cyber crime and other fraud would add to this figure). If the legislation did not allow information sharing between organizations and their private investigative bodies, the detection and prevention of fraud would be more difficult. This would add to the cost of insurance borne by law abiding policyholders and bank customers through increased premiums, service charges and fees.

Costs

The Regulations should not impose significant additional costs on the organizations to which it applies as it merely permits the continuation of existing information sharing relationships between organizations and their investigative bodies.

The Regulations will have no impact on Department resources.

Consultation

Bill C-54 (the precursor to Bill C-6) was introduced on October 1, 1998, and received extensive hearings before the Standing Committee on Industry and the Standing Senate Committee on Social Affairs, Science and Technology. Representatives of the insurance and banking industries, among others, appeared before the Standing Committee on Industry and raised the issue of the viability of private sector investigative activities under the proposed legislation. As a result, the bill was amended to provide for disclosure without consent to and by investigative bodies that were specified in the Regulations.

Subsequent to the Royal Assent of the Bill on April 13, 2000, Industry Canada had discussions with interested parties, including representatives of the insurance, credit reporting, telephone, banking, information technology, direct marketing, real estate, cable television, retail sale, as well as private investigators, Internet service providers, the Chamber of Commerce and the manufacturers and exporters associations. Consumer and privacy organizations, the provincial and territorial privacy commissioners and the members of the federal-provincial-territorial discussion group on privacy legislation were included in these discussions. Consultations were also undertaken with the federal Privacy Commissioner.

Compliance and Enforcement

Individuals may make complaints about the practices of an organization to the Privacy Commissioner of Canada who will investigate the matter and deliver a report to the parties. The Commissioner may make recommendations to an organization concerning its practices and whether they are considered to comply with Part 1 of the Act but the Commissioner does not have the power to issue binding orders on the organization. The individual or the Privacy Commissioner, or both acting together, may take unresolved complaints to the Federal Court of Canada which has the power to order an organization to change a practice and to pay damages to the individual.

Contact

Mr. Richard Simpson, Director General, Electronic Commerce Branch, Industry Canada, 300 Slater Street, Room D2090, Ottawa, Ontario K1A 0C8, (613) 990-4292 (Telephone), (613) 941-0178 (Facsimile), simpson.richard@ic.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraph 26(1)(a.01) of the Personal Information Protection and Electronic Documents Act(see footnote c), proposes to make the annexed Regulations Specifying Investigative Bodies.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Richard Simpson, Director General, Electronic Commerce Branch, Industry Canada, 300 Slater Street, Room D2090, Ottawa, Ontario, K1A 0C8.

Ottawa, October 4, 2000.

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

REGULATIONS SPECIFYING INVESTIGATIVE BODIES

INVESTIGATIVE BODIES

1. The following investigative bodies are specified, by name or by class, for the purposes of paragraphs 7(3)(d) and (h.2) of the Personal Information Protection and Electronic Documents Act:

(a) the Insurance Crime Prevention Bureau, a division of the Insurance Council of Canada; and

(b) the Bank Crime Prevention and Investigation Office of the Canadian Bankers Association.

COMING INTO FORCE

2. These Regulations come into force on January 1, 2001.

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Regulations Specifying Publicly Available Information

Statutory Authority

Personal Information Protection and Electronic Documents Act

Sponsoring Department

Department of Industry

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Part 1 of the Personal Information Protection and Electronic Documents Act (the Act) establishes rules to govern the collection, use and disclosure of personal information by organizations in the course of commercial activity. The legislation requires an organization, which is collecting, using or disclosing personal information, to obtain the individual's consent in most circumstances. Exceptions to this rule are found in paragraphs 7(1)(d), (2)(c.1) or (3)(h.1) of the Act which permit the collection, use and disclosure of personal information, without the knowledge or consent of the individual, if the information is publicly available and is specified by the Regulations. The purpose of this regulation is to specify what information and classes of information is publicly available information for the purposes of paragraphs 7(1)(d), (2)(c.1) and (3)(h.1) of the Act.

The basic premise underlying this regulation is that the collection, use and disclosure of publicly available personal information for commercial purposes should be subject to the same fair information practices as are required by the Act for all other personal information. As a rule, individuals are able to decide for themselves with whom they will share personal information and under what circumstances. However, some personal information enters into the public sphere through a variety of channels, often without the knowledge or consent of the individual. Examples include personal information that appears in telephone or other directories, public registries maintained by governments, public court records or that is published in the media. This personal information is made public for a specific and primary purpose, e.g., individuals allow their name, address and telephone number to appear in the telephone or other directories to enable others to contact them for personal reasons, to enable potential clients to reach them in their professional capacity or to enable others to verify their title, membership or professional qualifications. Some government registries such as land titles, personal property, municipal property tax rolls, are open to the public to promote longstanding public policy purposes. Public access is permitted to some court records to facilitate transparency in the justice system, while other personal information is placed in publications to publicize specific information about the individual (e.g., birth and marriage announcements).

Privacy concerns arise because more information is sometimes collected in public registries (many of which were created in an era when privacy concerns were not fully considered) than is required for the fulfilment of the primary purpose. Other concerns relate to the manner in which the information is made publicly available, e.g., whether there are any controls or limitations placed on who may collect and use it and how (increasingly access is possible to an electronic record rather than to the traditional hard copy. Internet access is more common as well). The fact that individuals have continuing expectations of privacy for some publicly available personal information is seldom addressed. Another privacy issue is the growing use that commercial organizations make of this information for purposes that often have nothing to do with the primary purpose for which the information was made public, i.e., to contact individuals and offer them products or services. There is also an increasing tendency to collect and use publicly available information to create comprehensive personal profiles of the individual, including their consumption habits, lifestyles and personal histories for a variety of other purposes, including employment decisions. Many, if not most, of these secondary uses are presently carried out without the knowledge or consent of the individual. A final issue is that, with few rules to govern publicly available personal information, organizations have little incentive to consider obtaining consent from the individual.

The proposed Regulations will permit one exception from fair information practices by allowing commercial organizations to collect, use and disclose certain personal information without consent. The Regulations are based on a recognition that some personal information is publicly available for a legitimate primary purpose, often with the individual's tacit agreement (e.g., the telephone directory and announcements). In these circumstances, it is reasonable to allow organizations to collect, use and disclose this information without adding the requirement to obtain consent. To require an organization to obtain consent to use this information for its primary purpose would not contribute to the protection of the individual's privacy, would add to the organization's costs and could frustrate some public policy purpose. However, it is also reasonable to insist that any purpose other than the primary one should be subject to the consent requirement. This approach is consistent with Principle 2 of Schedule 1 of the Act (paragraph 4.2.4) which states that a new purpose requires consent unless required by law. Using the criteria of consistency with the primary purpose or tacit consent as the basis for the regulation of publicly available personal information strikes the appropriate balance between the individual's right of privacy and the business need for information. Organizations will remain responsible for compliance with all other requirements of the Act for this information, including the appropriate purpose requirement in Clause 5(3) and will be subject to oversight by the Privacy Commissioner of Canada and the ability of individuals to seek redress in the Federal Court of Canada.

Part 1 of the Act will be implemented in two stages. On January 1, 2001, it will apply to the personal information of the customers and employees of the federally regulated private sector, including telephone and transportation companies, broadcasters, and banks. It will also apply to organizations that sell personal information across provincial borders, e.g., companies selling or renting mailing lists. On January 1, 2004, the Act will apply to all personal information collected, used or disclosed in the course of commercial activity. Due to the phased introduction of the legislation and the fact that it is new to the private sector, it is expected that additions or amendments to the regulation may be necessary. For this reason, the Department will continue to consider suggestions on a case by case basis in the future.

Alternatives

The legislative framework in Part 1 of the Act requires that publicly available information be specified by the Regulations. There are no alternatives to deal with the collection, use and disclosure of this information without consent.

Benefits and Costs

Benefits

The total growth of electronic commerce on the Internet is expected to increase from $195 billion (CAN) in 1999 to $2.8 trillion (CAN) in 2003. By developing the proper framework, Canada could capture a market share of $94 billion (CAN) in 2003, leading to new business opportunities and job creation to the benefit of all Canadians. By enacting the Personal Information Protection and Electronic Documents Act and these Regulations, the Government is putting in place one of the essential foundations of electronic commerce which will promote its acceptance and growth. The effect of the Act and Regulations will be to build trust in electronic commerce by providing individuals with assurance of protection for their personal information. The Regulations will also create a level playing field for business with clear, predictable rules for all. It will work to encourage on-line connectedness of Canadians — to each other, to business and to the federal government. Consumers and business will be able to conduct their on-line transactions with the confidence that privacy protection measures are in place and that they will be overseen by the Privacy Commissioner.

The legislation and the Regulations have been designed to be light and flexible for businesses to implement. Its principles are taken from the CSA International's Model Code for the Protection of Personal Information, developed and recognized by both businesses and consumers as a standard for privacy protection. Organizations will incur some implementation costs but the benefits of increased sales through the growth of electronic commerce transactions will more than compensate.

The Regulations will have no impact on the Department's resources.

Consultation

Consultations leading to this legislation began in October 1994 with the establishment of the Information Highway Advisory Council, which released a discussion paper entitled Privacy and the Canadian Information Highway. In 1998, the Government issued a discussion paper entitled The Protection of Personal Information: Building Canada's Information Economy and Society. Bill C-54 (the precursor to Bill C-6) was introduced on October 1, 1998, and received extensive hearings before the Standing Committee on Industry. The bill was subsequently re-introduced as Bill C-6 and received extensive public hearings before the Standing Senate Committee on Social Affairs, Science and Technology.

Subsequent to the Bill's receiving Royal Assent on April 13, 2000, Industry Canada had discussions with interested parties, including representatives of the insurance, credit reporting, telephone, banking, information technology, direct marketing, real estate, cable television, retail sale, as well as private investigators, Internet service providers, Chamber of Commerce and the manufacturers and exporters associations. Consumer and privacy organizations, the provincial and territorial privacy commissioners, the members of the federal-provincial-territorial discussion group on privacy legislation and the Treasury Board of Canada were included in these discussions. Consultations were also undertaken with the federal Privacy Commissioner.

Compliance and Enforcement

Individuals may make complaints about the practices of an organization to the Privacy Commissioner of Canada who will investigate the matter and deliver a report to the parties. The Commissioner may make recommendations to an organization concerning its practices and whether they are considered to comply with Part 1 of the Act but the Commissioner does not have the power to issue binding orders on the organization. The individual or the Privacy Commissioner, or both acting together, may take unresolved complaints to the Federal Court of Canada which has the power to order an organization to change a practice and to pay damages to the individual.

Contact

Mr. Richard Simpson, Director General, Electronic Commerce Branch, Industry Canada, 300 Slater Street, Room D2090, Ottawa, Ontario K1A 0C8, (613) 990-4292 (Telephone), (613) 941-0178 (Facsimile), simpson.richard@ic.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraph 26(1)(a.01) of the Personal Information Protection and Electronic Documents Act(see footnote d), proposes to make the annexed Regulations Specifying Publicly Available Information.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Richard Simpson, Director General, Electronic Commerce Branch, Industry Canada, 300 Slater Street, Room D2090, Ottawa, Ontario, K1A 0C8.

Ottawa, October 4, 2000.

MARC O'SULLIVAN
Assistant Clerk of the Privy Council

REGULATIONS SPECIFYING PUBLICLY AVAILABLE INFORMATION

INFORMATION

1. The following information and classes of information are specified for the purposes of paragraphs 7(1)(d), (2)(c.1) and (3)(h.1) of the Personal Information Protection and Electronic Documents Act:

(a) personal information consisting of the name, address and telephone number of a subscriber that appears in a telephone directory that is available to the public, where the subscriber can refuse to have the personal information appear in the directory;

(b) personal information including the name, title, address and telephone number of an individual that appears in a professional or business directory that is available to the public, where the collection, use and disclosure of the personal information relate directly to the purpose for which the information appears in the directory;

(c) personal information that appears in a registry collected under a statutory authority and to which a right of public access is required by law, where the collection, use and disclosure of the personal information relate directly to the purpose for which the information appears in the registry;

(d) personal information that appears in a court record to which public access is permitted, where the collection, use and disclosure of the personal information relate directly to the purpose for which the information appears in the record; and

(e) personal information that appears in a publication, including a magazine, book or newspaper, that is available to the public, where the individual has provided the information.

COMING INTO FORCE

2. These Regulations come into force on January 1, 2001.

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Footnote a

S.C. 2000, c. 12, s. 113 (Sch. 2, par. 1(z. 34))

Footnote b

R.S., c. 1 (5th Supp.)

Footnote 1

C.R.C., c. 945

Footnote c

S.C. 2000, c. 5

Footnote d

S.C. 2000, c. 5

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