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…”
Just read a little more and this is just bullshit. Check “all” that apply to you? What country do we live in?
Is the bank going to ask all existing customers to fill one of these out? Does the CRA require that everyone fill one of these out? If not how is the bank going to ascertain who to give these forms out to?
I am going to refuse to fill one out if I get one as I am and always been a Canadian and the US has no right to have my banking information. As for the wife, I am going to advise her that if she is given one of these forms she is to make up a BS excuse such as “I want my husband to see this first” or ” I need to take the form to my advisor”. Then the bank will never see the from again.
Yes, and as someone pointed out – all these concessions for a country that doesn’t feel the need to reciprocate. It’s disgusting.
I’m going to take the (possibly overly sanguine) view that this doesn’t fundamentally change anything with respect to FATCA compliance in Canada. Bear with me for a moment…
As I understand it, financial institutions are currently required to report to CRA the account data for US-person customers under certain conditions (e.g. accounts beyond a certain balance threshold that are not RRSP). Details are a bit vague and we don’t know if they over-report, but that’s the basic idea.
The onus is on the FIs to find US persons. They look for US indicia in their customer records and proactively contact “suspected” US persons; they ask customers about citizenship when opening new accounts or updating existing accounts. What they require in terms of documentation seems to vary: some just ask you and check a box on an application form; some require that you fill out a W8-BEN or W9 (which I think is bullshit, they should not be using a US form when this has nothing to do with US assets or income); some may have produced their own forms, for all I know.
What I think has happened here is that due to CRS the good folks in Ottawa have thoughtfully produced some standard forms for FIs to use. Curiously, they have two versions, with and without a separate line for US citizenship. It doesn’t look like the form needs to be submitted to the CRA, but is rather an aid to FIs in their own compliance efforts. The existence of these forms doesn’t necessarily mean the banks will be any more vigilant in verifying the information they’re given; in fact I could see them being a little less vigilant, in the sense that if the customer filled out an official CRA form, the matter ends there.
The good news, I suppose, is that it at least standardizes the process and prevents the misuse of US government forms, with their scary perjury warnings.
The bad news, of course, is that people seeing this form without being aware of FATCA may and US tax rules may unwittingly “out” themselves.
My impression is that banks aren’t going through their customer’s bank records for the specific purpose of finding US persons, but should the need arise to review an account (for instance to add or subtract a co-account holder) the bank will use it as an opportunity to look for indicia.
A friend of mine (a non-tainted Canadian) went to the bank to make a change to her account. The bank asked her to certify she wasn’t a US person. My friend, knowing the situation, went ballistic. Apparently the bank person didn’t have a clue why she was asking the question. Just following orders.
@Nononymous. I think you might be on to something here. Although it will always be a guessing game as to what the motives of “the good folks in Ottawa” might be, it looks as though with this new form they have decided to implement a standardized declaration of tax residency. Chances are good that the banks will consider their FATCA and CRS due diligence to be complete once they have a filled out form in their customer’s file. This will have the beneficial effect of eliminating the haphazard system which exists presently.
While its true that a few uninformed customers may accidentally out themselves, anyone who is that clueless on the subject in this day and age is already continually at risk of accidental exposure, form or no form. Bring it on, and we all know what the correct responses to the questions are.
@ Bubblebustin
I recently changed an account (from one with virtually no interest to one with a smidgen of interest) … didn’t have to answer any questions or fill out anything. (It’s a credit union which did sign onto the FATCA compliant list.) The teller just changed the account with a few keystrokes on her computer. I hate that it’s all rolling a dice of how we are treated in our banks AND at the border.
Any idea, anyone, of what the consequences are for accidentally and/or innocently misinforming. Something along the lines of it depends on the definition of what “resident” is. It’s my fervent belief that it’s the USA which doesn’t understand what that word means. They seem to think a person can be in two places at one time. They seem to think a person can serve two tax masters at one time.
I didn’t have time to follow all the links, but looked over the form again. No indication of what happens to that form after you submit it to the FI. If you only check box #1 to certify Canadian tax residence, I can’t imagine they would report anything to the CRA – since that’s essentially the default state for everyone living in Canada with a bank account.
There’s also no specific reference to what FIs must do to verify the declaration. (Only boilerplate threats on the form: “I certify that the information given on this form is correct and complete” and “Failure to provide this information may result in interest payable, penalties or other actions.”) There are of course more detailed regulations in the IGA.
Given my general faith in human laziness, I don’t find it difficult at all to imagine that for most FIs due diligence ends with the collection of a signed form, no further questions, thank you very much. I would however expect higher levels of scrutiny for anyone handling seven-figure sums (though I expect anyone buying or selling a house in Vancouver or Toronto these days could easily be moving millions through their daily accounts).
It’s never been clear to me what would be the consequences of deliberately misinforming a financial institution. My cynical view is that unless you cause a great scandal resulting in massive US withholding that nearly bankrupts the bank, they would most likely want to (very, very quietly) fire you as a customer, and hope that nobody notices that their compliance procedures are crap.
I suppose now they could send the form to the CRA with a note attached saying “customer lied!” but I’m not sure how that “may result in interest payable, penalties or other actions” since those penalties would be levied by the US, on whose behalf Canada will not collect.
The mystery deepens.
Interesting that the form requests date of birth but not place of birth.
Its amusing to contemplate how an accidental (say a person born in the US but returned to Canada as an infant) might respond if confronted with this new form. While such a person might know that technically they are a US citizen because of the US birthplace, if they have never lived there, never filed taxes there, have no SSN, and never had anything to do with the US, how are they supposed to answer that question?
“Yes, I’m a US citizen, no I don’t have a US TIN (SSN) because I’m a Canadian who doesn’t give a rat’s ass about the US, and no, I don’t plan to get one in this life time.”
90 days??? Could the CRA actually force someone to get a SSN against their will? If so, what if the application is denied? Plus I have heard those things are not easy to get from outside the USA and the process might take way longer than the mandated 90 days. Could the CRA force someone to travel to the US to expedite the process? As usual, the bureaucrats have not thought through the potential consequences of these stupid rules.
@ maz57
“Could the CRA actually force someone to get a SSN against their will? If so, what if the application is denied?”
Would that be something like forcing a person who does not travel outside of Canada to get a US passport or even a Canadian passport, simply to fill in a slot on a bank questionnaire? If someone does not need to file US taxes (below 1040 filing limit) and does not need to file an FBAR (below threshhold amount) what right does a bank have to force a person to get an irrelevant US TIN or SSN? What’s next? Everyone must have a number to prove one’s very existence and that one is in compliance with every damn law in every damn nation one ever existed in?
Read what a document marked “Protected B” means here:
https://www.tpsgc-pwgsc.gc.ca/esc-src/protection-safeguarding/niveaux-levels-eng.html
“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 [emphasis mine] ask you to fill out this or a similar form.”
It really is a crazy situation that how some of us will wish to “interpret” our “facts” to our banks all depends on the policy of the particular institution, bank manager or whatever. We MAY never be asked to fill out these forms. If we never visit the bank in person will it be mailed to us? Who knows? If it’s mailed I MAY arrange not to have received it.
Regardless, I will live my life according to the information I received in person from a US consular official on the subject of dual citizenship. She said that while in Canada I am Canadian and can make no request for US assistance while in Canada. While in the US I am American and therefore can make no request for Canadian assistance while in the US. (That’s why I’m not going there.)
The corollary? While on Canadian soil I cannot very well tick Box #2. If my bank has a problem with that I guess it’s back to the mattress.
Which is why I’m beginning to think this form is actually a good thing. Check box #1. You’re done. Problem solved. FATCA goes away forever.
On edit: Check box #1 ONLY, I meant to say.
@Nononymous:
“It’s never been clear to me what would be the consequences of deliberately misinforming a financial institution. My cynical view is that unless you cause a great scandal resulting in massive US withholding that nearly bankrupts the bank, they would most likely want to (very, very quietly) fire you as a customer, and hope that nobody notices that their compliance procedures are crap.”
That’s why US-born individuals in many countries find themselves in the position of having to prove to their banks that they aren’t US Persons. The FI is off the hook as long as they’ve got the CLN on file.
@iota: it’s all CYA. The bank covers itself, the IRS employee too. And most of all the compliance professional does it too.
That’s why it is essential to retain control over the information one gives out.
The bank need not know I’m a US person.
FinCen need not know that that savings account is in fact a mutual fund
The IRS only wants nice forms.
The tax professional need not know about a house that was sold, a family company, or many other things. All he/she needs is a number for the income box, a number for the foreign tax paid.
We need to make life easy for all these people 🙂
But for existing accounts, the Model 1 IGA due diligence doesn’t cover the FI for asking the question, if automatic sweeps turn up no indicia. None of the banks I already had accounts with have ever asked me about US citizenship. Only new banks. So lies that have already been told, by existing customers, wouldn’t now be likely to cause a problem for bank or customer. Is my guess
But for existing accounts, the Model 1 IGA due diligence doesn’t cover the FI for asking the question, if automatic sweeps turn up no indicia. None of the banks I already had accounts with have ever asked me about US citizenship. Only new banks. So lies that have already been told, by existing customers, wouldn’t now be likely to cause a problem for bank or customer. Is my guess.
@FredB –
“it’s all CYA. The bank covers itself, the IRS employee too. And most of all the compliance professional does it too.
That’s why it is essential to retain control over the information one gives out.”
Absolutely – and important to understand who can legally ask you the question.
The IGA gives FIs data protection law cover for asking the question of new customers; not for asking the question of existing customers if there’s no existing indicia already on file (such as US birthplace).
@iota
I should qualify my remarks when referring to Canadian FIs, which I generally am most of the time.
Interesting that UK banks are not looking for US indicia in existing accounts, at least in your experience. It seems that some banks in Europe are doing so, and they may have birthplace or citizenship recorded as part of basic account information.
In Canada that data was typically never recorded, so a search of existing customers won’t get very far. There can’t be “lies that have already been told” if the questions were never asked. (Though I’m now beginning to think that the awkward conversation with my broker a few years ago was caused not by them somehow suspecting that I was a US citizen – via conversations with my parents presumably – but rather having an old US address on file because the RRSP account was set up for me when I was away at grad school. Or the broker’s compliance procedures were much stricter than a bank’s because, with the exception of me, they only deal with relatively wealthy customers.)
I’m also curious about an account I have in Germany. I opened it using my Canadian passport, which of course shows US birthplace. But I don’t know if the bank ever kept a copy, as it’s an online account and I only showed the passport at the post office to certify my identity when submitting the application forms. So far so good, but also there’s never more than a few thousand euro sloshing around it there.
@Nononymous:
“Interesting that UK banks are not looking for US indicia in existing accounts, at least in your experience. Interesting that UK banks are not looking for US indicia in existing accounts, at least in your experience. It seems that some banks in Europe are doing so, and they may have birthplace or citizenship recorded as part of basic account information.
In Canada that data was typically never recorded, so a search of existing customers won’t get very far. ”
Yes, that’s why I was never asked. It should be the same for all Model 1 countries.
My existing-before-FATCA accounts were all opened decades ago, when banks in the UK didn’t have a reason to wonder where their customers might have been born. And I had no other US indicia such as US addresses, phone numbers, etc.
Some EU countries (not the UK) now incorporate birthplace in the ID; I don’t know when that started. It’s nothing to do with FATCA but unfortunately does have the consequence of now counting as US indicia for US-born customers. I don’t know if Germany is one of the countries that uses birthplace in this way.
“There can’t be “lies that have already been told” if the questions were never asked.”
But some existing customers _will_ have had indicia such as a US address on file, and _will_ have been asked the question and may have lied. If the FI accepted the answer and didn’t seek proof at the time, there doesn’t seem to be any reason they would ask the question again.
@Maz57 says:
90 days??? Could the CRA actually force someone to get a SSN against their will? If so, what if the application is denied? Plus I have heard those things are not easy to get from outside the USA and the process might take way longer than the mandated 90 days.
It is only easy if you are a ‘refugee’ being flown into the US every night.
No idea who they are or where they are from, but are flown in ( NO women, no children ONLY military aged men) in the dead of night , hour after hour always after midnight. No idea where the flight has come from. However, US officials are there to do three things:
Issue SSNs. Issue valid US passports. Transport to a small town in such numbers as to overwhelm the community. ( YES you read that right!)
EVERY night and it has not subsided under the Trump administration.
Not yet anyway.
The Americans living in these communities have no idea who these people are, where they are from but are expected to pay to integrate them into schools and accept them for health care at the local hospital. Not to mention housing and other essentials. THIS is what is happening right now.
Not what you know, not who you know, it is WHO you are.
Western legal citizens and residents of a sovereign nation. Canada or the US.
USED to end sovereignty and any and all Western social structure and we are paying for it.
We have seen what has happened to European nations who have already brought in 5 million and they plan to bring in more than 3 million more at this moment. ( Overwhelmingly military aged men)
There is no official recognition that is happening in the US but it certainly is happening.
In the US it is the UN who are vetting entrants into the United States while the corrupt judiciary block President Trump’s Immigration orders.
In Canada , Trudeau is bringing in ‘refugees’ ( almost all military aged men) Photo ops of ‘families’ being given refugee status are just that: Photo Ops.
The Canadian Taxpayer is paying these so called refugees up to $43,000 per year while our Retirees are lucky to collect 12,000 per year from EARNED CPP.
Where can this possibly go and how will it end? It is perfectly clear where it will end: Western civilization will no longer exist. The violent rabble that is being shipped in is nothing less than an invasion of a barbarian horde. AT OUR EXPENSE.
Mr. Trudeau has been filmed in a mosque saying a prayer prohibited to anyone NOT a convert to Islam.
Mr. Trudeau had the kind of help from Obama operatives to get elected that Egypt got when Morsi was forced on the Egyptian people.
Will WE see 33 million in the streets in protest , as they did in Egypt?
Since our entire population is 34 million, give or take a refugee or two, should we expect that kind of revolt?
If Canadians revolted against anything it would cause fatal heart attacks of government officials it is so unheard of.
There are two fundamental issues at the heart of Canada’s survival as a sovereign nation:
ONE: The return of the Bank of Canada to Canadians for Canadian use , wrested out of the hands of the IBS private owners who have raided this country since 1974 to the tune of over 2 Trillion dollars.
( issue being fought by our own government for over 5 years at OUR expense. Their reason?
They do not have one. The suit is to force them to UPHOLD THE LAW. EXISTING LAW OF THE LAND.) How much money have they spent in the last 5 years to fight this? Millions.
Second: The lawsuit fought for Charter Rights . Our own suit.
These two lawsuits and their outcome WILL determine whether or not we remain sovereign.
( If President Trump had not ended the TPP , which Trudeau intended to sign, we would already have seen our sovereignty ended. )
There are only two mosquitos on the huge elephant that is global domination. That elephant hide is hard and tough and at the moment these two mosquitos are not even noticed by the host.
Time to bite and draw blood. And make sure they are infected with the virus called “Sovereignty”!
@ FuriousAC
Amen! (I saw that interview too.) May Joseph Arvay “float like a butterfly, sting like a bee”, when he FINALLY gets into the courtroom with our constitutional challenge. We’ll all be in the mosquito gallery buzzing him on and Ginny is just itching to sink a few stingers into the defendant’s team, if they give her a chance. And over in another corner we have Rocky (i.e. Rocco Galati) preparing to land some blows on behalf of COMER. 🙂
Sonny-boy, sunny-days Trudeau has turned out to be quite the little, two-faced, turncoat stinker where FATCA is concerned. I hope he’s a one-termer but they always seem to have another stinker lined up for the next term, and the term after that, and so on and so on.