FATCA Information from Canada Revenue Agency

Here is Information on FATCA From CRA.
Updated link to FAQS on IGA: http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/fq-eng.html
This information in particular jumped out at me under II

Will my financial institution be asking me if I was born in the U.S.?
A financial institution complying with the agreement will not be required to ask its account holders about their place of birth.If a financial institution, applying the due diligence rules of the agreement to its accounts, discovers any records connected to the account that have an unambiguous indication of a U.S. place of birth, the financial institution may treat the account as a reportable account or follow up with the account holder to obtain documentation that shows the account holder is not a U.S. resident or U.S. citizen.
Does the agreement require Canadian financial institutions to report to the CRA on any individuals who were told that they relinquished their U.S. citizenship when they became Canadian citizens?
The agreement does not require Canadian financial institutions to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.

Most of our banks won’t have an “unambiguous U.S. place of birth in their records because they were not able to ask that question when we opened accounts with them.
I don’t have the energy or concentration to review this or comment in detail tonight (just returned from the Information Session in London Ontario).  However, I wanted to get it posted so others could see it and share their thoughts.
 
 

37 thoughts on “FATCA Information from Canada Revenue Agency

  1. Has it been established if the banks must notify someone that they have identified (ex. by electronic database review) as a US person before they report their private account info. to the CRA? Or do they report the info. to the CRA without the person aware of the reporting (in this case the person may first become aware of their account being reported by receiving a notice from the CRA or even from the IRS)?

  2. Mr. A,
    From http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/fq-eng.html
    14. Does my Canadian financial institution have to notify me if information on my accounts is being reported to the CRA?

    Canadian financial institutions must be open about their policies and procedures for complying with the Agreement and must be prepared to make this information available to anyone who asks about them. Although there will be no obligation for financial institutions to automatically notify their account holders about reporting to the CRA under the Agreement, financial institutions must, upon request, allow account holders to have access to the personal information that has been reported.

    15. What if a Canadian financial institution reports my account in error?

    In the unlikely event that a Canadian financial institution reports your account in error, it can send the CRA a notice of correction. If we receive this notice after sharing the original data with the U.S. Internal Revenue Service (IRS), we will ask the IRS to disregard the original, incorrect data.

  3. “We will ask IRS to disregard incorrect data.”
    That’s not exactly reassuring, especially with demands from Levin and others that our FATCA info be available to IRS “upon request” for investigation of money laundering, terrorist financing, drug trafficking, fraud, corruption and other crimes and misconduct.
    We know IRS has an “epidemic” of identity theft with far less information from Americans in U.S. than is being demanded from us. Plus, the U.S. are convinced they gave the right to know everything about everyone on the planet.

  4. These are excellent concerns about “due process” and “due diligence.” \
    In a rather different context, and a little more calmly, let me share what I said on this subject on the Brock site, and what I am about to send off to the government, opposition, and CCLA. It is NOT sufficient that an account holder MAY be able to correct an incorrect or inappropriate reporting of an account to IRA AFTER THE FACT, IF he or she happens to find out about. That is NOT due process, and screw due diligence to the IRS — what about due diligence on the apart of our own government to its own citizens and residents?
    Here’s my detailed comment over at Brock:
    NOWHERE in this agreement and proposed legislation is there any provision for due process, I would even say due diligence, in ensuring that accounts are not being reporting inappropriately and without providing the account holder with a) awareness their account information is about to be sent off to a foreign government, b) on what specific basis or bases that account was flagged, and c) a reasonable opportunity to object or contest the accuracy of that basis or those bases if they are wrong. Which latter point is an appalling possibility if not likelihood, given that the wording of the agreement and the Finance Canada information for individuals indicates there is NO attempt being made to ensure that all FFIs are asking the same questions, following the same processes, or ensuring that their employees who are interpreting the indicia have a clue what the hell they are doing and what those things mean.
    You can be extradited to another country on the basis of an extradition warrant under an extradition treaty, but NOT before there has been a court hearing in Canada at which you and your lawyer have an opportunity to examine the basis for that warrant and challenge it in front of a judge. I’m not suggesting there needs to be a court review of reportable accounts, but I am suggesting that CRA (I wouldn’t trust hundreds of FFIs to do this on their own, it would only compound the problem) absolutely MUST provide some reasonable opportunity for the account holder to review the basis for reporting and challenge it if they can. There are too many opportunities here for mis-reporting of non-reportable accounts by error, by misunderstanding, or frankly even deliberate malice by some bank clerk who has a personal grudge or prejudice. And the procedure needn’t be expensive or onerous for CRA. Most financial accounts have email addresses attached to them. Presumably accounts are being reported electronically, in some format that CRA can easily search and produce robo-emails to the email addresses of the holders, indicating a) your account X has been reported to us, b) for Y reasons, c) we will forward this to IRS on Z date unless you reply to this email before then giving us an explanation and appropriate documentation to contest those reasons.
    I would urge everyone, especially those in Tory ridings, to write your MP and raise this due process issue. Not only are we facing potential Section 15 violations under the Charter, there is another section (8, if I recall correctly) concerning the “small” issue of “due process.”
    Any person purporting to be a conservative who doesn’t understand the concept of and need for “due process” (on ANY legal or financial matter) doesn’t deserve the name conservative nor his/her seat in the House of Commons.

  5. Thank you all. Although I am reasonably sure that I have no US “indicia” in my banks’ databases (my only indicia is the US place of birth, as it likely is for many of us here), I am concerned where this is all going, and I wonder if and when the day will come when I may have to show where I was born, even though the CRA currently states that “a financial institution complying with the agreement will not be required to ask its account holders about their place of birth”.
    How long this will remain the case is anyone’s guess and underscores the importance of trying to make sure that our equality rights under the Charter’s section 15 are upheld. It really seems that a CLN is the best way to protect oneself from this insanity. It may be better to expose oneself to the DOS in a relinquishment attempt (over renunciation) rather than have oneself exposed (with account info) to the IRS. I assume that DOS will only get your name, DOB & address but no personal financial information. And if one is successful then one really is free – no longer a US citizen in the eyes of the USG.

  6. And a financial institution not be required to ask about place of birth is not the same thing as being prohibited from asking. The Canadian gov’t has given some leeway as to how different FI’s approach the situation of identifying US persons.

  7. Doing the CLN will get you on IRS radar. a)
    a)You should first determine how much you will have to pay IRS to be compliant. if you are not compliant you will recieve IRS nasty letter and will not be able to cross border. The CRA will not collect in Canada for taxes owed when you were a Canadian citizen. The revenue rule should protect you from collection from court but the 1995 USA Canada tax treaty sort of weakened the situation.
    http://uniset.ca/other/cs6/68OR2d379.html
    If you do not CLN
    1) If bank do not find USA indicies you are safe. If you have a USA birth place on your passport do not cfross border.
    2) If Bank find USA indices on existing accounts
    a) If you can effectively explained why you relinquished without CLN you are off the hook,
    b)you can be recalcitrant and they can not shut down your bank account. You can aslo give them the SSN if you want.
    They may send your birth date to CRA, which if satisfy itself, you are USA citizen who did not effectively relinquish they will send info to USA. You will receive nasty letter from IRS which you can ignore as long as you do not cross border.
    Doing the CLN will definitely get you on the radar.
    If you are not a Canadian citizen the CRA can collect IRS debt. This is because of 1995 tax treaty signed by Liberal Party.

  8. Hi. Is there any way to send in a article in formatted text (bold, italics, etc.) I would like to share a rather detailed set of questions concerning the FATCA IGA’s effect on senior citizens that I have already sent to the Dept of Finance’s commentary email address, and that I will be sending as well to the ministers of Finance, National Revenue and Seniors as well as the corresponding critics of the oposition parties. Thanks.

  9. I should have mentioned that I specifically refer to those seniors who thought they had already lost their US citizenship.

  10. @Petit Suisse,
    Can I also suggest you send a copy to CARP which ” is a national, non-partisan, non-profit organization committed to a ‘New Vision of Aging for Canada’ promoting social change that will bring financial security, equitable access to health care and freedom from discrimination. Our mandate is to promote and protect the interests, rights and quality of life for Canadians.”
    I have two email contacts for CARP:
    Michael Nicin, Director, email: m.nicin@carp.ca
    Sarah Park, Policy Researcher and Coordinator, email: s.park@carp.ca

  11. @Blaze
    You wrote:
    “@Petit Suisse: Do you want to do this as an author or as a comment?
    If as an author, I can ask Outraged to set you up.”
    Not sure I understand the difference. Just thought it would be easier to read with formatted text. If it seems useful, wouldn’t mind seeing it on the home page, but maybe the content isn’t important enough for that.

  12. The difference is as an author, you could do your own thread. In that way, it would not be likely to be buried as a comment in another thread.
    As an author, you can also do your formatting. I have found I can’t import formatting directly from a Word Document but have to reformat again.
    Outraged is really our tech guru here. She might have better suggestions for you, but she is currently away.

  13. @Blaze.
    I just tested the comment input box and found I could do some formatting that way. So I’ll work on my text this weekend, and submit it for correction to my dear friend and neighbour, who is a retired English teacher. Then I’ll post it as a comment here because it’s mostly about CRA’s info and upcoming implementation rules. If you and Outraged think it’s worth a little extra exposure in the featured section, I could send a file later, but I don’t think I’m up to authoring a thread.
    Incidentally, your site is very useful and it’s easy to find info on it.

  14. Here’s a letter I’m sending to the Ministers of Finance, National Revenu, and Seniors as well as the critics of the opposition parties. You will note that I concentrate on pre-1986 ex-Americans and refer to tbem as elderly. Hope that doesn’t offend anyone, but none of us in that group is still a spring chicken. Also, the fact that I am addressing prolems of implementation by CRA, does not mean that I approve of FATCA…far from it.
    ……….
    As a retired Canadian citizen, I have some questions about the recent intergovernmental agreement (IGA) between Canada and the US concerning the Canada Revenue Agency’s implementation of the US Foreign Account Tax Compliance Act (FATCA) in Canada. There is a large group of senior Canadian citizens that one could refer to as ex-Americans. Considering the number of people involved, and the vulnerability of this segment of the population, I believe they deserve more than a standard form letter as an answer:
    1. Will the American Internal Revenue Service be able to harass Canada’s ex-American elderly Citizens?
    Under the proposed FATCA intergovernmental agreement, tens of thousands, possibly hundreds of thousands, of elderly Canadian citizens may be at risk of finding themselves reported to the American Internal Revenue Service and of receiving notices of assessment and fines. This is a distinct possibility unless Canadian financial institutions receive clear directives and clarifications from the Canada Revenue Agency on how to handle their situation. And if the CRA does not make a concerted effort to inform these citizens of their rights, they may fall prey to so-called tax experts whose advice and fees, combined with US penalties, could cost them many thousands of dollars.
    I am referring to those Canadians born in the US and who took Canadian citizenship as adults before 1986 and to those Canadians who were born to Canadian parents in the US, were registered as Canadians, reached adulthood in Canada before 1978 and did not go to the US Consulate to swear allegiance to the US.
    They were told in no uncertain terms by US Consulates that they would automatically lose their US citizenship, but were rarely given a Certificate of Loss of Nationality. Now they may need to have such a certificate to prove they are not US persons under FATCA. They could obtain one through a US consulate after a complicated bureaucratic process. Not only is this time-consuming and stressful, but often requires travel that would be a hardship for many. But worst of all, there is a very big catch even if they should obtain a CLN. The certificate will indicate that they lost their citizenship way back when before 1986, but the IRS, referring to a 2004 law, says they must file an income tax declaration for the five years previous to the day they request the certificate. And the consulate sends a copy of the certificate to the IRS. This led to an article in the International tax journalentitled “The malevolent time machine,” which you may access here:
    Expats live in fear of malevolent time machine.
    Some interpret the 2004 law as not applying to those who relinquished before 1986, but the IRS has not accepted this interpretation. Can you picture an 85-year-old resident of a retirement home contesting this law in a Washington, D.C. court?
    Canada Revenue Agency seems to mention this problem in its new FAQ on the FATCA intergovernmental agreement.
    This is the pertinent question on the site:
    “17. Does the Agreement require Canadian financial institutions to report to the CRA on any individuals who were told that they relinquished their U.S. citizenship when they became Canadian citizens?
    The Agreement does not require Canadian financial institutions to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.
    Individuals who have relinquished their U.S. citizenship may be asked by their financial institution for documentation to this effect.”

    The IGA itself also refers to a situation where an institution may accept “a reasonable explanation of the reason the Account Holder does not have such a certificate despite relinquishing U.S. citizenship.”
    The trouble is, the answer is not clear. Will the institutions be asking for a Certificate of Loss of Nationality from the US Department of State? Or will they be instructed by CRA to accept Canadian documentation, such as a citizenship certificate showing that the person became a Canadian before 1986 at a time when he or she automatically lost their US citizenship? Such Canadian documentation should be accepted as a reasonable explanation, and Canada’s financial institutions should be so informed by CRA.
    2. Will there be protection against witch hunts by overzealous banks?
    Another vulnerability for these citizens is the lack of clarity caused by the frequent use of “not required” both in the IGA and the FAQ, when referring to the institutions’ search for possible US persons among their account holders. This is the case for the CRA’s FAQ questions cited in the previous question.
    The same ambiguous language is used in the IGA when referring to account balance thresholds. For instance, under the section Accounts not required to be reviewed, identified, or reported, in the IGA, which refers to accounts under $50,000, this text appears:
    “Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting Canadian Financial Institution elects otherwise, either with respect to all Preexisting Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Canada provide for such an election.”
    And again, in the CRA’s FAQ, the following question:
    “6. Will my financial institution be asking me if I was born in the U.S.?
    A financial institution complying with the Agreement will not be required to ask its account holders about their place of birth. “

    Since “not required” is not the same as “should not“, the language implies that financial institutions could report all accounts, regardless of the balance, and ask all account holders for their place of birth, if they so choose, unless the implementing rules and directives that the CRA sends to financial institutions protect elderly “suspected US persons” from institutions that might find it easier to behave in such a manner.
    Without meaning to be facetious, let’s suppose that Parliament were to adopt a law on euthanasia. If someone were to ask whether grandchildren will be allowed to have their grandparents put down in order to inherit sooner, we would not expect as an answer: “Grandchildren will not be required to have their grandparents euthanized.” Grandma would not be reassured.
    3. Will CRA be more proactive in informing Canadian citizens that CRA will not collect for IRS?
    Another essential step toward protecting these elderly citizens is to actively inform them of their rights. The FAQ on the Department of Finance website, as well as occasional articles in newspapers and a letter sent to various correspondents by Minister Flaherty confirm that CRA will not collect for IRS from Canadian citizens on liabilities incurred while they are residents of Canada. However, this information is conspicuously missing from the FAQ on the CRA’s website which is the first place most Canadians would look for information.
    The CRA is the only agency capable of communicating with practically every Canadian citizen. They should publish this information not only on their website, but on the forms for income tax filing, both printed and electronic, as well as on their electronic filing site.
    I am hoping that both you and the people working for you, will feel compassion for these Canadian citizens who have spent their lives working in and paying taxes to Canada, and who in no way deserve to be thrown into such a desperately depressing situation.

  15. @WhiteKat
    I sent a copy to m.nicin@carp.ca at CARP, as an attached file with this in the body of the email:
    “You might be interested in this text sent to three government ministers as well as the corresponding opposition critics.  It points out the obscure and obfuscating language used in the FATCA IGA and CRA’s not very useful FAQ on the subject.  In short, almost all ex-American senior citizens could find themselves reported to the IRS, or almost none, depending on the rules of implementation and other directives the CRA decides to send to Canadian financial institutions. It is also partly a response to Minister Flaherty’s recent letter to you.”

  16. …and so did I send another email to CARP.
    They are hearing the “other side” of this discrimination by national origin story.

  17. Anyone trying to open a new account in any Canadian financial institution is now being asked their place of birth. I checked Royal Bank and TD website where you can open an account on line and in fact they ask the place of birth question.

  18. Is that for an investment account vs a personal banking account, Norman? We should know if the “national origin” discrimination has started.
    GOC, Financial Consumer Agency of Canada, Your Rights and Responsibilities:
    http://www.fcac-acfc.gc.ca/eng/resources/publications/yourRights/Pages/OPENINGA-Ouvertur.aspx still says:
    What identification (I.D.) do you need?
    There are different combinations of ID you can use. You have three choices.
    Choice 1—Show two pieces of ID from List A:
    List A
    Canadian driver’s license
    Current Canadian passport
    Birth certificate issued in Canada
    Social Insurance Number (SIN) card
    Old Age Security card with your Social Insurance Number (SIN) on it
    Certificate of Indian Status
    provincial or territorial health insurance card that can be used as identification under provincial or territorial law
    Certificate of Canadian Citizenship or Certification of Naturalization
    Permanent Resident card or a Citizenship and Immigration Canada form IMM 1000, IMM 1442, or IMM 5292
    Document or card, with your picture and signature on it, issued by one of the following authorities:
    Insurance Corporation of British Columbia
    Alberta Registries
    Saskatchewan Government Insurance
    Department of Service Nova Scotia and Municipal Relations
    Department of Transportation and Infrastructure of the province of Prince Edward Island
    Service New Brunswick
    Service NL of the province of Newfoundland and Labrador
    Department of Transportation of North West Territories
    Department of Community Government and Transportation of Nunavut
    If you don’t have two pieces of ID from List A above, you can:
    Choice 2—Show one piece of ID from List A and one piece of ID from List B, below:
    List B
    Employee ID card with your picture on it and issued by an employer that is well known in the community
    Debit card or bank card with your name and signature on it
    Canadian credit card with your name and signature on it
    Client card from the Canadian National Institute for the Blind with your picture and signature on it
    Current foreign passport
    OR
    Choice 3—Show one piece of ID from List A and have someone the bank knows confirm that you are who you say you are.

  19. Hm, I just went and checked the online applications for TDCanadaTrust and BMO, for an everyday chequing account and neither ask place of birth on the form.
    @Norman, what kind of account were you looking at?

  20. I also just checked TD, RBC and ScotiaBank. I could not find anything asking for place of birth.
    They do, of course, ask for date of birth. That is very different than requesting place of birth.

  21. I also can not find a reference to place of birth on the applications.
    However, for anyone who may have opened an account in the past using ID with US indicia, they might be advised to open an account at another financial institution fairly soon using only ID that does not indicate any connection to the US.
    If you used a Canadian passport with a US place of birth recorded, that information may or may not be in the FI’s internal records.
    2 1/2 years ago I asked a very knowledgeable person at TD what they did with the copies made of Ids presented at the time of account opening. I was told that the type of ID and serial or other number only was recorded. The copies were then shredded after a few days. It is unlikely that place of birth was recorded at that time.

  22. I tried again to open an online direct investment account, a TFSA and a self admin RRSP account in Royal Bank. Here is what happened. Enter the Hereunder link.
    https://www1.royalbank.com/cgi-bin/rbaccess/rbunxcgi?F6=1&F7=TK&F22=4WNASERVER&7ASERVER=N600LD&7ASCRIPT=/App_VCB0/AdobeLC.mvc/Navigate/DI/en&channel=public
    it will take you to Account Opening, then to Protecting your privacy page which (which is a joke) then next page is account selected where you would say that you are not a US citizen nor US resident for tax purposes then few boxes open to ask the city and the country where you were born.

  23. @Norman That issue with investment accounts has been around for at least a few years. It is not related to the recent IGA.
    I’ve never understood why that is legal and no one has ben able to tell me. I have not raised it with any of the lawyers I’ve spoken with, but we should probably bring it to Joe Arvay’s attention.
    Is there anyone who can explain why investment accounts can so blatantly demand such information?

  24. I opened an online RBC Direct Investing Account back in 2008 and recall being asked if I was a U.S. citizen. I remember thinking that was an inappropriate question and decided to check the “no” box . . . am very glad now that I did so 🙂

  25. I opened all of my accounts so many years ago, I don’t really remember for sure, but I’m pretty sure that I didn’t have a usable passport back then, so would have to have used drivers license. I hope.

  26. The thing about it now is, even if you say you are not a US citizen nor a US resident, they still ask you the country where you were born. It looks like they are preparing the new accounts to be scanned for compliance purposes. I think the banks are trapped between their clients and the IGA signed between Canada and the US. Also, by sending financial info on clients to the CRA only, they seem to profess to clients that they are respecting their privacy. What is weird in all this is that the CRA will be providing the IRS with financial info they themselves should not have and usually do not have access to some if it. Mercifully from reading all tax experts documents it seems that letting the IRS enforce the collection in Canada, particularly on dual citizens is unlikely to happen under the present Canada-US tax treaties. For the future, knowing the US intentions, who knows what will happens. Hopefully with all the steam building up in the US and in Canada, FATCA will be repealed in the future by the republicans, or the US Government will come to it’s senses and will re-legislate the right way, or the Canadian courts will strike down some FATCA reporting making it useless. Actually, I am just repeating what I have been reading on this blog. I will be interested in hearing other people comments on this. Thx.

  27. I “FATCA proofed” my accounts a long time ago, but I’d have no qualms whatsoever lying on an account application if asked an illegal question. The banks are merely covering their own asses here. Its not their job nor are they enthusiastic about playing detective for the IRS.
    So give them the answer they want to hear. Once this wrong information is entered into the system, problem solved. People, we need to throw a few wrenches into the FATCA gears. When the game has illegal rules, the gloves are off; make your own rules! I don’t see we that we have any moral obligation to be truthful when the game is immoral to begin with.
    I can’t see the CRA going on a US witch hunt. Their job is to collect tax from Canadian residents, not go on a fool’s errand for a foreign government.

  28. After posting the above I Googled the name of the US town I was born in. There is a town of the same name in Ontario!

  29. I so agree with maz57. And I really think that’s what Flaherty expects us to do. For U.S. persons to offer up such personal info. to the banks seems naive and foolish. I like Maz57’s take on the whole process . . . it’s illegal / immoral to begin with and I do not feel obligated to enter into such an agreement with anyone.

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