Just after the Canada US FATCA IGA was signed, CRA put out a list of frequently asked questions.
Among the list is item 14 which caught the attention of some: (emphasis mine)
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.
In his testimony before the Senate Finance Committee on April 30th, Kevin Shoom mentioned that there was a change to the implementing legislation to take away the voluntary nature of informing customers that their accounts have been flagged as reportable. He cited ITA subsection 265(5), which is written in the usual almost incomprehensible language of the Income tax Act.
|(5) For the purposes of paragraphs (2)(a) and (b), subparagraph (2)(c)(ii), paragraph (3)(a) andb)(ii), subparagraph B(3) of section II of Annex I to the agreement is to be read as follows 3. if any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic search,or if there is a change in circumstances that results in one or more U.S. indicia being associated with the account,then the Reporting Canadian Financial Institution must seek to obtain or review the information described in the portion of subparagraph B(4) of this section that is relevant in the circumstances and must treat the account as a U.S. Reportable Account unless one of the exceptions in subparagraph B(4) applies with respect to that account.
I have asked Kevin to ask CRA to change their frequently asked questions to revise item 14 and he agreed to do so.Until the Charter Challenge nullifies the IGA, there’s going to be mistakes made by FIs. At least now, with this change, they will be required to contact customers before passing private information through the CRA to the IRS.