Perhaps all Canadian banks routinely send out requests, at online account sign-in, to their customers to obtain info on tax residency — and this is old news.
Anyway, this morning I received this online request, for the first time, while trying to sign into my online account at my Canadian bank. I am a long-term customer at the bank:
Request to validate your tax residency information
To comply with Canadian tax law, we’re required to have clients validate that their tax residency information we have on file is correct and complete.
Our records show that your tax residency information needs to be confirmed.
Here are the next steps you need to take
• Online Banking: Select Customer Services > Change your tax residency
• Mobile Banking: Select Customer Services > Personal information > Change your tax residency
Please review your tax residency information now and update as required.
Tax residency is a method used by the Canada Revenue Agency (CRA) and by other countries to determine how much tax you should pay. Most countries, including Canada, determine taxes based on the amount of time you spend in the country, rather than your citizenship. For instance, some Canadians spend the winter months outside of Canada. The U.S., however, taxes all U.S. citizens as U.S. residents. It is your responsibility to determine your tax residency status in other countries.
[Customer clicks on “I understand” and is then asked three questions:]
Are you a tax resident of Canada? Yes/No
Are you a U.S. person for tax purposes? Yes/No
Do you pay taxes in any other country? Yes/No
By selecting continue I declare, as required by Canadian law, that the tax residency information and U.S. person status (including my Tax ID number) are to the best of my knowledge and belief, correct and complete. Failure to provide may result in my account information being reported to the relevant authority and I may be subject to a penalty under the Income Tax Act.”
Assuming your wife has no US person status, she should politely tell the bank to stuff it. Presumably the notarized copy is meant as an alternative to appearing in person with said ID?
A piece of ID won’t confirm tax residency, but place of birth on that ID may tell the bank enough trust or not trust a person’s answer to the FATCA question! ID showing a US birthplace means that the customer will be considered a US person unless they produce a CLN (or convince the bank that their parents had diplomatic status). Otherwise no, ID alone won’t tell a bank that a person once had a green card that they haven’t relinquished, or that they lived in the US for a decade and naturalized, or that they have US citizenship by descent. Ultimately it’s an honour system for those cases.
CRS and tax residency for non-US countries is even slipperier. That probably relies on address information, and customer honesty. (When we finally had to stop using a friend’s apartment as a mail drop and gave our Canadian address to our German bank, they required that we list Canada as our tax residence and provide our SINs – which wasn’t a big deal; while updating our information I declined to mention my US citizenship.)
Again, I would hope that a notarised copy is only needed as an alternative to appearing in person.
I’d go straight down to the local branch (in a grumpy mood) with the requested documents. Let them make their own determination and if they want them notarized let them do it right then and there (on their nickle, of course).
If that’s not good enough, its time to switch banks. You’d think after 30 years they would know who you are.
@Maz 57: re “You’d think after 30 years they would know who you are.” Logically, yes, but the compliance staff are far more vigilant. (Thirty years ago, you showed a drive’s license to open an account and they gave you a toaster.) For the 5+ years I’ve been on IBS, many have predicted this sort of increased inspection. It’s here.
There seems to be to groups of Canadians. Those without a US place of birth and can simply lie. Those with a US place of birth. Would the political heat be turned up if all Canadian banks were forced to subject all Canadians to a process proving they are not a US person? Should the US person liars be allowed to get away with going forward? Are there any legal arguments to force the banks?
My spouse , bon in the USA but no longer a US person has not been fatca’d . Reasonably high value account at TD Waterhouse. I will post if we ever hear from them.
Are there any legal arguments to force the banks?
Isn’t that what the IBS lawsuit is all about?
Those with a US place of birth can also lie. Canadian banks do not require ID showing place of birth, so use a drivers’ license not a passport when opening an account. That’s what I do, and many others as well.
It’s perfectly fair – all Canadians can lie equally, regardless of where they were born. Ergo no need for pressure of any sort.
It would be extremely difficult to force someone to prove that they were not a US person. It would require seeing proof of where they were born, plus a detailed account of their life history (no ten-year spell south of the border?) and their parents’ life histories. It would be an effort on par with a security clearance. Fortunately banks will only do the minimum required by the FATCA agreement: ask the question, and in the absence of any other evidence, accept the answer as given by the customer.
“I’d go straight down to the local branch (in a grumpy mood) with the requested documents. Let them make their own determination and if they want them notarized let them do it right then and there (on their nickle, of course).”
If it were me I would be giving them hell right now, including the fact that I am not concerned that the information they give to the Americans might not be accurate, but that they are handing that information over at all.
However, my wife is all for a peaceful life.
And they actually say that the notarising of the ID document can be done by a Lloyds bank employee that knows my wife, so then the ID document can be sent to the savings department.
This is bloody ridiculous, she’s been a client for 30 years has no US or EU connections yet WE are threatened with our private and personal data being sent off all over the globe if she does not jump the hoops.
It’s not worth being angry all the time. And who’s handing anyone’s information over to the US? The bank is asking for proof that your wife is not a US person.
If I were in your wife’s shoes, I’d slow-walk this. Wait a few months then call them up and politely explain that I’m not a US citizen, their lack of trust is offensive, and that I’m busy and don’t have time to bring in a pile of documents to be notarized – certainly not at my own expense – and if they continue to behave like this I’ll take my business elsewhere.
I said as much – politely but firmly – to an investment firm when they demanded a W-8BEN from me despite having only Canadian assets. I said I wasn’t going to sign a US government form if I wasn’t a US citizen or subject to US law, and if they didn’t like it I would find somewhere else to park my money. I won that argument. And yes I lied to them.
It’s outrageous and offensive, IMO, that a W8-BEN is (or may be) required in your wife’s case. It should only be kept on file by the bank, though, and not forwarded to the IRS.
Instructions for the Requester of Forms W–8BEN, W–8BEN–E, W–8ECI, W–8EXP, and W–8IMY (04/2018) Scroll to heading “Requesting Form W-8”
I don’t think Mike said anything about his wife being required to fill out a W-8BEN – we may be conflating stories here.
When I was asked to sign one it was early days, possibly before FATCA came into effect in 2014. Since then Canadian banks have developed their own forms, and CRA helpfully provides a generic CRS/FATCA form as well. All of these are kept on file at the bank, not sent to CRA or the IRS, as they are only used to determine US person status or other foreign tax residency.