Tim just provided to me these Canada Revenue Agency (CRA) documents (some last modified 3/22/2017) on implementation of the new Common Reporting Standard (CRS). You can imagine how the Government will use this in FATCA litigation.
Please look through these documents and their links. Anything unexpected?:
“…The automatic exchange of financial account information with the United States (U.S.) exists under the Canada-U.S. intergovernmental agreement for the Enhanced Exchange of Financial Account Information with respect to taxes signed on February 5, 2014.
Canada’s automatic exchange of financial account information arrangements with jurisdictions other than the U.S. has been implemented in accordance with the Common Reporting Standard (CRS). The implementation of the CRS legislation is effective July 1, 2017.” See link.
“…Under the CRS, financial institutions must take steps to identify certain accounts held by, or for the benefit of, non-residents and to report such accounts to the Canada Revenue Agency (CRA). The information would then be available for sharing with the jurisdiction in which the account holder resides for tax purposes under the provisions and safeguards of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters or the relevant bilateral tax treaty.
On December 15, 2016, Part XIX was added to the Income Tax Act, implementing the CRS due diligence and reporting obligations in Canada. This legislation together with the administration by the CRA will allow the CRA to exchange financial account information with participating jurisdictions beginning in 2018…” Link
THE DECLARATION:
“Declaration of Tax Residence for Individuals – Part XVIII and Part XIX of the Income Tax Act If you are an individual and you are planning to open a financial account or if you already have a financial account with a Canadian financial institution, it may ask you to fill out this or a similar form.
Canadian financial institutions are required under Part XVIII and Part XIX of the Income Tax Act to collect the information you provide on this form to determine if they have to report your financial account to the Canada Revenue Agency (CRA). The CRA may share this information with the government of a foreign jurisdiction that you are resident of for tax purposes. In the case of the United States, the CRA may also share the information with that country’s government if you are a U.S. citizen…
Section 2 – Declaration of tax residence
Tick all of the options that apply to you.
— I am a tax resident of Canada. If you ticked this box, give your social insurance number.
— I am a tax resident or a citizen of the United States.
If you ticked this box, give your taxpayer identification number (TIN) from the United States. If you do not have a TIN from the United States, have you applied for one? Yes No— I am a tax resident of a jurisdiction other than Canada or the United States.
If you ticked this box, give your jurisdictions of tax residence and taxpayer identification numbers…”
Canada and implementation of CRS
The only option I will ever tick is option #1. If a person is a tax resident of Canada, then as far as I am concerned that person by definition cannot be a tax resident of any other jurisdiction no matter what the US government says.
My advice is to not check box number 2.
On the one hand, this is the shits because it means a whole lot of unsuspecting dual citizens could unwittingly out themselves.
On the other hand, at least it’s a Canadian form we’re dealing. I was pretty annoyed when the investment broker wanted either a W8 or W9 for my RRSPs a few years ago.
And, finally, although this is a government form, it’s a form you give to your bank. So if you don’t check #2 it’s up to the bank to prove otherwise that you’re a US citizen. No big change from how things work today. If you’re prepared for the question and willing to lie, no FATCA danger. It’s all about persuading the bank – they are the gatekeepers of your information.
If I were a Canadian resident, I would be absolutely outraged.
The US gets their very own check box on the CRS form, that even mentions citizenship, even though they are NOT part of CRS.
How far is the Canadian government going to bend over?
Does this mean they will send data from US citizens to the US even when the IGA is struck down or FATCA repealed? Despite the US not reciprocating, neither FATCA nor CRS.
Notice they only require citizenship information for one country – The US. Clearly discrimination.
It is no small thing that the US is not reciprocating in FATCA.
It is no small thing that the US is not signing on to CRS.
It is no small thing that there is a difference between citizenship and resident.
I refuse to check #2. A Canadian, is a Canadian, is a Canadian.
If they ask, I’ll say, “I took Canadian citizenship with the intention of relinquishing US citizenship.” That requires no ‘proof’ on my part.
The fact that I will make a formal renunciation later, makes no material difference to me.
“I renounced but I can’t find my CLN.”
Once again they pick Canada Day to implement their dirty deeds. 🙁
“Does the agreement with the U.S. require financial institutions to report to the CRA on any individuals who relinquished their U.S. citizenship?
No. Financial institutions do not have to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.
Financial institutions may ask individuals who have relinquished their U.S. citizenship for documentation to this effect.”
What happened to the opportunity to provide a “reasonable explanation” as to why one doesn’t have a CLN?
“If I am assessed tax or a related penalty by the U.S., will the CRA assist the U.S. to collect it
While the Canada–U.S. tax treaty says that Canada may assist the U.S. to collect certain taxes, it also says that the CRA will not assist the IRS to collect your U.S. tax liability if you were a Canadian citizen when the liability arose. This is true whether or not you were also a U.S. citizen at the time.”
What about a failure to file 8938’s? I thought Roy Berg wrote somewhere that the penalties associated with them were enforceable.
There is also a second CRA declaration of Residence form that does NOT contain the option two regarding the US. I have no idea why this form was published in addition to the first.
http://www.cra-arc.gc.ca/E/pbg/tf/rc520/rc520-17e.pdf
@maz57
CRA actually claims in the instruction that if you are a resident of Canada you can NOT be by default a resident of another country UNLESS that other country is the US.
Once again IBS shows how valuable many brains and efforts are better than one. In the days before IBS, I would not be able to understand how this might affect myself and my fellow Canadians.
@Tricia, re;
“It is no small thing that the US is not reciprocating in FATCA.
It is no small thing that the US is not signing on to CRS.
It is no small thing that there is a difference between citizenship and resident.”
Exactly. Notice that in the total number of countries they cite as CRS participants/signatories, in order to bolster their rationale for public consumption – of course we know – and they hope no-one else points out or cares that the US is NOT in that number, and never will be.
and,
@Embee, re;
“Once again they pick Canada Day to implement their dirty deeds”
And it is the Canada Day in the 150 Anniversary year too. It all seems to show the level of their unconcern and depth of contempt for ordinary Canadian citizens and residents – the public they swore to serve and to whom they owe a duty of care and a fiduciary duty.
and, @Bubblebustin,
re;
“..What happened to the opportunity to provide a “reasonable explanation” as to why one doesn’t have a CLN?”
Great point. And just how far are they willing to go with this – since a CLN was not necessary to obtain before, and if they force/co-erce/push people to get one, that’s forcing more people to pay the US 2350. USD, making them await the pleasure of a foreign government and its apparatus, and encouraging them to entire the spiderweb – whose purpose is to suck assets out of the rest of the world and deliver it up to the US Treasury.
And I thought their fiduciary duty was to Canada first. Looks like the CRA is becoming more and more an arm of the US Treasury.
@Tim, they apparently have no compunction about embracing the paradox of citizen=residency in order to send people into the US maw to be chewed up.
How can they claim that this is not assistance in collection as Allison Christians pointed out about the FATCA IGA? Now they’re using the CRS to bolster US exceptionalism and make it work.
@badger
http://www.europarl.europa.eu/news/en/news-room/20170324IPR68441/meps-call-on-us-lawmakers-to-increase-beneficial-ownership-transparency
More scathingly put,
“If the EU tax haven blacklist process is to have any credibility, the U.S. must be on the list, if it does not commit to the OECD common reporting standard,” Giegold said.
https://www.bna.com/eu-lawmakers-visit-n57982085478/
Stephen, thank you for this post. Australian implementation of CRS is on my list of blog posts to write. It will be interesting to compare with Canada. Australia doesn’t have a special form for declaring tax residence; they rely on the banks’ due diligence and on-boarding procedures. Anecdotally, our banks are fairly relaxed about the process.
In addition to the issues raised above, I’m concerned that CRS has no lower value threshold; all accounts are reportable. Banks are going to do what’s easiest, which means more banks may ignore the $50,000 threshold for FATCA and just report all accounts.
@Tim. I think I’m going to save a copy of that second pdf just in case I ever need it. If a bank shoves a Declaration of Tax Residence which includes the US option over the counter, I’ll make some excuse about reading the fine print, take it home, swap it for a filled out non-US option form, and return it to them. Chances are good the the front line bank employee will never even notice the difference. Problem solved.
By the way, not only have I always ignored what the US government says about its forever US tax residency, it looks like I now have to ignore what the CRA has to say about it as well. A pox on all of them.
Buried within all that new CRA documentation is a list of countries that CRA says are complying with CRS. Note the exclusion of the US and Eritrea. CRA claims about 100 participating countries.
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/crs/jrsdctns-eng.html
There is a guy who is beating the drums loudly for 34 States to request a constitutional convention supposedly to void some of the amendments and add some. I am really afraid he will succeed in getting the states to say yes and when a convention happens they will just throw the original out and write a new one to suit whatever purpose they choose. The reason we have not had a convention is that everyone is as frightened as I am. The reason they give is not exactly what will happen, Some of the amendments were touted to do one thing and right away they used them for something else. You simply cannot trust politician. They say one thing and do another and have since recorded history began.
One out of three. Trending downwards.
@Wilton. This is pointing out the obvious, but the lion’s share of the posters on this forum are either already ex-US citizens or are working actively to not be one as soon as possible. People here either left the US years ago, or never lived there in the first place. If they are engaged in politics at all, chances are it is Canadian politics, not US politics. That’s why its so rare for someone here to respond to one of your posts.
Stated another way, no one here really cares much about what goes on internally in the US except when it spills across the border and negatively affects our life here in Canada. Not only does no one here care what kind of tax system the US has or might have, no one here cares whether or not the US is headed towards a Constitutional convention, crisis, or whatever. (I do confess I occasionally switch on a US news channel due to morbid curiosity roughly equivalent to gawking when driving past a car wreck.)
Don’t get me wrong, I’m not saying you shouldn’t post here. Its just that I think you should know that your efforts are mostly wasted on people who have long since written off the US for whatever reason and now have little interest in US internal affairs. I heartily agree with your comments about politicians in general, however. My $.02.
Wife is a US citizen. However, she lives, works and pays taxes in Canada and has a SIN. I don’t see how it would be “lying” to check option 1.
Sorry should have added PR Status since she moved here as a child at 4.