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:
“Hello STEPHEN,
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 residencyPlease review your tax residency information now and update as required.
I understand
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.”
Doh!
@ Japan T,
It’s old to news to quite a lot of us, but this matter hasn’t come up in a long time and this can be beneficial to newer readers, who might get ambushed with one. Also, I don’t recall anyone mentioning getting the message when signing-in on-line before (as opposed to by post) and perhaps some readers have something to add on that aspect.
This happened to me and even though I declared I was not a resident of the US for tax purposes they eventually requested proof of this. If you have a CLN (Certificate of loss of nationality), which I did, this is an easy way to provide it, if you don’t it is much more challenging.
Unfortunately CLNs require you to renounce/relinquish your US citizenship and are way over priced making it unattainable for many, which is why there are lawsuits against the cost.
Maybe one day the price will have been found unfair in court and I can ask for a refund…
Harper signed off on FACTA, Sock Boy thought that was an outrage and would defend Canadians. Trump was going to repeal the whole thing. Old Joe and Obama thought it was a good idea then and now. How is the whole thing working out? Hopeless!
John Richardson, has anyone in the legal profession given consideration to the statement in this letter above in the post, that this leads to financial harm (to self) as a Canadian citizen living in Canada?
The First Three Lines imply harm and state that FATCA is a Canadian Law. Once an individual makes a declaration which puts them under the umbrella of FATCA / IRS / FBAR / FINCEN, then they are immediately considered to be Canadians with “expunged provisions” of the Canadian charter of rights and freedoms, our Canadian constitution!
How can the Supreme Court of Canada fail to recognize this occurrence and description?
from the notice:
“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.”
Would FIRST, remind anyone at the bank of their fiduciary duty to their customers and clients and write down the name and position of anyone spoken to especially in person.
Second, would call the bank and ask for the manager to inquire about what records they have that show that a clients tax residency information needs to be updated or confirmed, most likely this is a typical tax office type of alarmist and scare tactic to get people to reply, best thing to do is not reply and see if it escalates further.
This is weirdly late to the party.
Which bank might this be, if the OP is willing to disclose? It’s not something new at RBC, that much is clear. (It can’t be, as the particular menu sequence is not available on their site you can’t set your tax residency online.) I’d be curious as to whether it’s being shown to all customers on login, or only those for whom tax residency info has not been recorded, which the banks have supposedly been doing since 2014. I know at some point around five years ago I was asked verbally when updating an account record in person at the branch.
The introductory text is terrible, really confuses more than it explains. The wording of the questions amuses me:
Nowhere do they define US person status. Someone who knows themself to be a US citizen (by birth or parentage) could easily answer “no” without thinking they’ve done anything wrong.
One can be tax resident in another country, with a CRS reporting obligation, without paying any taxes or even having a filing obligation (if one’s income is low enough) in that country.
Yes, No, No
Done and dusted.
@stephen arvay
Since early days the FATCA rule has been if one is asked the question and refuses to reply, then one is designated “recalcitrant” and reported as if one is a US person. (Yes, guilty until proven innocent.) Ignoring or refusing the question will only get you so far. Fortunately, however, it’s very easy to misunderstand the question and answer “no” incorrectly.
I just got the message logging into CIBC. I’m answering as @Portland says.
Weird. I clicked on the bottom, and then nothing. I don’t think I confirmed anything.
The information provided is a bit incomplete first of all. This may be coming from a digital banking service in order to complete it filing requirements. Best to ask the bank why the need to validate (if info is already on file).
@RR
Best not to ask the bank anything. Answer yes, no, no and move on.
@RH
I’d answer the same ,of course, but why put one’s own head in the sand ? When openning an account,they ask these very questions in one fashion or another,why ask again?
Can you imagine if one has to answer that question for the 190 other countries in the world if all of them applied the same US taxation CBT system. What about filling out the equivalent of the the Form W-8 BEN for 190 countries. That would be fun.
@RR
We don’t know if they’re being asked again. Canadian banks haven’t all been proactively reaching out to existing customers. In the past, long-term customers tended to get the question when they went to the bank to open a new account or change something – that’s when a bank employee would ask to “update your account record” by confirming that you still had the same job, and oh by the way do you have any other tax residency, that sort of thing. But if you never went into the bank, you were never asked. (New customers have been asked since 2014, of course.)
My wife got a FATCA letter this week, she’s been with the bank 32 years. She’s all for filling it in and forgetting about it, I’m all for giving the bank a really hard time over it.
It’s interesting to me that the letter is signed by the director of the banks savings department and my wife has considerable amounts of money on a savings account right now, enough to buy houses kind of money.
This leads me to wonder if they are seeking out higher value accounts for their friends in America.
Whatever, I’m seeing red.
Giving the bank a hard time won’t achieve much, except possibly closure of the account.
Higher balance accounts may receive greater scrutiny – those provisions were in the Canadian IGA and subsequent guidance, last time I checked.
Without knowing your wife’s circumstances (citizenships, country of birth, country of residence) it’s difficult to advise. If possible, deny US person status. Do this quietly, without causing a fuss.
Can a Canadian be charged for answering these questions falsely?
Can a Canadian born to Pakistani immigrant parents be charged if he doesn’t tell his bank that he is a Pakistani Person?
I would love to see what would happen here
YES. NO. NO.
Your move, bank.
@Nephew
A Canadian born to Pakistani immigrant parents is probably not a tax resident of Pakistan, so their answering “no” to the third question is in fact correct. Citizenship (by birth or descent) does not automatically equal tax residency, except of course in the case of the United States.
Otherwise it’s not clear what the consequences of lying to the bank would be. Charged with what, exactly? I suppose fraud if it lead to some huge scandal that cost the bank significant sums of money. Otherwise they would probably close the account and keep it quiet. There is a provision for $100 fines if a person refuses to provide requested information to CRA, but that doesn’t apply to dealings between banks and their customers.
I’ve never seen this. I’m curious which bank this is (and also scared!)
Btw, has anyone thought of asking a question at the upcoming federal debate: https://newsinteractives.cbc.ca/longform-custom/leaders-debate-form-2021
I mean, I’m sure it’s very low on Canadians’ priority list, but I don’t know how else we get this issue noticed.
There doesn’t seem to be much Canadian press coverage – mostly European.
@Alex
Apparently it might be CIBC.
There’s no reason to be scared. You simply answer “no” to questions about US citizenship, and banks will make no attempt to validate the truth of your answer. If you were born in the US, be sure to use a driver’s license rather than a passport as photo ID when opening a new account, since the former does not show place of birth.
FATCA is a done deal in Canada, I’m afraid. It’s been in effect since 2014, none of the federal parties will do a thing to change it. But we have been very fortunate thus far, Canadian banks are relatively lax in their compliance efforts. As long as you are forewarned – and are comfortable with telling a lie – then this is easily avoided.
Having looked at my wife’s “confirm your tax residency” form it is actually a list of ID documents to be notarised and returned.
How does notarised ID confirm tax residency?
Background – British born and bred and British resident, same account for at least 30 years.
First time we have heard of a bank requiring ID to be notarized. Something is rotten in the State of Denmark. Who is supposed to pay the notary?
Time to get pissed off.