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The case for keeping SIN cards

Posted by on Jul 8, 2012 in HR Issues, Income Tax, Moneyville | 0 comments

Read this article on moneyville.ca
June 20, 2012
I’m generally not very good at remembering numbers or passwords. Because I can click on a phone    number on my smart phone instead of dialing, the only telephone numbers I can remember these days are those I memorized in the prehistoric days BC (before cell).

However, since I got my first summer job my social insurance number has been imprinted on my brain, so I never had a good reason to apply for a replacement when I lost my SIN card years ago. That’s why when I initially read that the federal government is planning to send out new SIN numbers in a letter and do away with cards in March 2014 in order to save $1.5 million/year and improve security, my first thought was who cares? It’s just another piece of plastic weighing down our wallets.

Then I read a First Reference Talks blog by payroll expert Alan McEwan. He makes several interesting arguments why SIN cards should not only be retained, but employers should require all new employees to produce them for examination.

For example, MacEwan says:

1. Employers must ensure employee names on T4 slips match up with the names on their SIN cards, but it’s quite common for people to use names that are not their legal first names. Seeing the card ensures employers report the correct legal name on the employee’s T4. Among other things, this helps ensure that employee CPP contributions are credited to the proper person. Years ago, there used to be millions of dollars in CPP contributions that could not be properly allocated from T4 slips when employees changed their names due to marriage or divorce, but did not bother to tell their employers.

2. Verifying the employee’s actual name on the SIN card also helps prevent payroll fraud. The Canada Revenue Agency’s T4127 guide which provides software developers with the logic needed for income tax source deductions also contains the logic to validate SINs. This logic is easily modified to generate random numbers that will pass the test for a valid SIN. By using this methodology, an unscrupulous payroll manager could generate valid SINs and use them to populate a payroll with non-existent employees. One technique to prevent this is to require a photocopy of employee SIN cards in each employee’s file.

3. SIN cards with a number starting with the digit 9 have an expiry date. Such expiry dates are used by Citizenship and Immigration Canada to manage employees who are in Canada with only limited authorization to work here. So far, there has been no information on how these expiry dates will otherwise be communicated to employers or whether SIN cards will still be issued to such employees. Eliminating the requirement for all employees to present an actual SIN card could make it easier for employees to hide the fact that they may not be legally entitled to work for the employer.

But Service Canada officials and the Office of the Privacy Commission of Canada don’t agree with McEwan. They say that that the SIN card is essentially useless because it doesn’t have any built-in security features . Furthermore, if the card is stolen it can lead to identity theft and other privacy breaches.

Related: A cautionary lesson on identity theft

A 2007 Public Opinion Survey conducted for the Office of the Privacy Commissioner found 35 per cent of respondents had not memorized their SINs; 46 per cent keep their SIN cards in their wallets – a 16-point decrease from 2005 – and nine per cent report losing their card. Forgotten numbers can be re-requested by mail or at a Service Canada Centre.

What do you think? Are SIN cards important personal identity cards or a useless piece of plastic in your bulging back pocket? Is getting rid of them false economy, or a necessary step to protect your privacy?

Related: You should always cash cheques right away

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