Comment on FR Doc # E7-20504

The Canadian Bankers Association's comments are attached as a pdf file. Excerpt: Recommendations: i. Provide an implementation period AFTER the regulations are final: Some of the largest U.S. withholding agents have already adopted the procedures before the proposed regulations have been enacted and prior to the proposed effective date. This has given qualified intermediaries (?QIs?) insufficient time for preparation. There are still substantive outstanding questions regarding application and given that submissions on the proposals are being made and a public hearing is scheduled for February 6, 2008, changes may be made before the regulations are enacted. If a reasonable implementation period is not provided, premature implementation of procedures is likely to be followed by changes to those procedures, and will impose significant costs on firms and their clients. It is also impossible for QIs to implement any systems related changes on the basis of proposal legislations that may be subject to change. ii. Simplify the certification process: The certification process is costly for intermediaries and confusing to investors. It is expected that most payments will qualify to be treated as proceeds rather than dividends. In this regard, we recommend the following changes to the proposed regulations and to other legislation related to section 302. 1. Treat small account holders (five per cent or less of any class of outstanding stock) in a publicly traded corporation receiving distributions to which section 302 applies as having had a proportionate decrease in their interest, and therefore treat the distributions as payments in exchange for stock. 2. For account holders with more than five per cent, allow the custodian to calculate the change in percentage holdings to determine whether the distribution qualifies as a payment in exchange for stock. Also permit the portfolio manager or other party responsible for managed accounts to do this. 3. Allow electronic communications (voice, phone, fax) in accordance with the QI?s standard business practice; also, enable individuals to do the calculations online. We also recommend the following revisions for those situations where certification might still be required: 4. Remove the requirement for QIs that have primary back-up withholding and Form 1099 reporting responsibility to pass additional documentation related to U.S. non- exempt recipients to a U.S. paying agent. 5. Permit those parties that are authorized to sign on behalf of flow-through entities (e.g., general partner, trustee, etc.) to provide certification as beneficial owners will not be able to do the necessary calculations. iii. Allow withholding QIs to adopt the same escrow procedures as U.S. withholding agents: The proposed regulations provide for escrow procedures that are only available to U.S. firms. It is unclear why these procedures have not been extended to withholding QIs that have already assumed NRA withholding responsibility under their QI Agreements. The current proposals to restrict the escrow procedures to U.S. withholding agents reduces a withholding QI?s ability to effectively and efficiently perform its withholding obligations under its QI Agreement, and also adds additional burdens and costs to the U.S. withholding agents that must withhold on selected payments to a QI that would otherwise receive all payments gross.