What Is The FATCA Question and CRA Guidelines

Stephen Kish has a thread over at Brock on What Are The Questions Banks and other financial institutions will be asking.
The information being posted is alarming. The questions being reported include:

SCOTIA BANK: “Are you a U.S. person for tax purposes?”
TD BANK CANADA TRUST: “Are you a U.S. citizen” AND “Where were you born?”
HSBC CANADA: “Do you hold multiple citizenship” AND “What is your place of birth”
CIBC: Local branch will receive info July 2.
BMO: “Do you have any other citizenships” (tentative per @Anne Boleyn)

Even more alarming is this from Pollyanna:

Warning! Within a week of each other, both our RBC personal/business account manager and our RBC Dominion Securities advisor informed us they are required to report our jointly held accounts (me: Canadian and US citizenship, husband: Canadian only) even if nothing in their paperwork currently identifies me as American. Just the fact that they became aware of it in conversation, over the course of our years long relationships with them, compels that the information be passed on. I appreciated their honesty, and am in the final stages of our divorce with their services.

Final CRA Guidelines for financial institutions that Bubblebustin posted say

Unambiguous U.S. place of birth

8.27 When the indicium found is an unambiguous indication of a U.S. place of birth, the account must be reported unless the financial institution obtains or currently maintains a record of all of the following:

  • a self-certification showing that the account holder is neither a U.S. resident nor a U.S. citizen;
  • evidence of the account holder’s citizenship in a country other than the U.S. (for example, a passport or other government-issued identification); and
  • a copy of the account holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of why:
    • the account holder does not have such a certificate; or
    • the account holder did not obtain U.S. citizenship at birth.

8.28 In the context of an electronic record search, an “unambiguous indication of a U.S. place of birth” must include identification of the U.S. as the country of birth. Identification of a city and/or a state as the place of birth, without identification of the country of birth as the U.S., is not considered to be unambiguous.

My birth certificate says Commonwealth of Pennsylvania. Nothing on it indicates U.S. Yet I suspect TD would still consider that an unambiguous U.S. place of birth.

Plus, CRA Information for individuals says:

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.

So, does TD have the right to ask for place of birthÉ  If customers give their birth certificate with the city and state, but no country, that is not an unambiguous place of birth.
I think there may be some potential grounds for a Human Rights or Privacy Commission complaint.
Yet, if you refuse to give the information:

What if I don’t co-operate with my financial institution?

If your Canadian financial institution has information in its records that shows that you may be a U.S. citizen or a U.S. resident and you have not given your financial institution enough information to clarify your status, it may have to report your account to the CRA as a U.S. account. If that’s the case, the CRA would exchange information about your account with the IRS.



4 thoughts on “What Is The FATCA Question and CRA Guidelines

  1. Lynne,
    I’m guessing these questions will be asked even if they have nothing on record to give them suspicion. In this case, what will they do if one simply refuses to answer the questions?
    Your last quote says:
    If your Canadian financial institution has information in its records that shows that you may be a U.S. citizen or a U.S. resident and you have not given your financial institution enough information to clarify your status, it may have to report your account to the CRA as a U.S. account. If that’s the case, the CRA would exchange information about your account with the IRS.
    The above specifically states they have some info already on record.

  2. @WhatAmI:  I suspect if they ask the question without having the information on file and you refuse to answer, they will treat you the same as if they do information in your records. I think they will your accounts to CRA to hand over to IRS.  I think it will like refusing to give a breathalyzer at a RIDE check stop.
    That is my speculation only, but CRA gave them tons of wiggle room to not have to out their customers–i.e. they are not required to ask for place of birth.
    CRA could not have been more obvious than saying banks are not required to ask for place of birth and then adding: Identification of a city or state as the place of birth, without identification of the country of birth as the U.S., is not considered to be unambiguous.
    Yet, it seems the banks (or at least TD) will choose to ignore that and demand Where were you born.
    The fact banks may demand this information anyway could give someone grounds for a Human Rights or Privacy complaint against the banks even though the Act prevails over all other laws. It is there in black and white.  The banks do not have to do this under the Implementation Act. They are choosing to do it. I have no idea if it would succeed or not.
    That, of course, is my personal opinion only. I am not a lawyer, but if TD or YNCU asks me where I was born, that is exactly what I intend to do.
    Because I blog, tweet and write articles with my real name and my photo, I do not know if that places me in greater or lesser risk for my FIs to demand information from me.
    On one hand, it would be hard for them to say they did not know Lynne Swanson is a US person.  On the other hand, my very public stance and knowing I have a legal opinion from Joe Arvay may make them decide they do not want to mess with Granny!
    Actually, my TD Branch manager is aware I was born in the US. She has also known for two years how strongly I feel about this and the lengths I am prepared to go to ensure my rights are protected.
    I recently switched from Libro Credit Union to Your Neighbourhood Credit Union because of very different answers I received to the same question. YNCU did not ask any US questions and I did not offer any information except the basics.

  3. If you say to them that they have met their obligation to ask such a question but you have no obligation to answer it and then because of that, they then send your bank information to the CRA for reporting to the IRS, WITHOUT any actual US indicia in your file, you would have grounds to sue them.

  4. It’s beginning to feel a lot like the US is big brother. Now I wonder if I should lay low until my CLN arrives in 3-6 months or go into the credit union and tell them its on the way. This is a bad situation getting worse. I am very glad that we are united in going for the Charter Challenge.
    I haven’t been asked any questions yet. Vancity requires that you be a BC resident to apply for an account with them. One would think that they would be in the partially exempt category. Yet here is their statement below and link:
    Understanding FATCA
    If you are a Vancity member and a U.S. person living outside of the United States, you need to know about the Foreign Account Tax Compliance Act (FATCA) and understand how it may apply to you.
    FATCA is a United States law requiring financial institutions around the world to collect and submit financial information on U.S. persons living outside of the United States to U.S. authorities.
    How it works
    Starting July 1, 2014, Vancity will begin collecting and submitting financial information to U.S. authorities for all Vancity members who are U.S. persons. Vancity will submit this information to the Canada Revenue Agency (CRA). The CRA will then forward this information to the U.S. Internal Revenue Service (IRS).
    All financial institutions in Canada are legally required to submit this information under an agreement made between the Canadian and U.S. governments.
    Who is affected
    All U.S. persons who hold certain types of bank accounts outside the U.S. are affected by FATCA. You are considered a U.S. person if you are:
    A citizen of the U.S. (including those born in the U.S. but resident in Canada or another country, who has not renounced U.S. citizenship)
    A lawful resident of the U.S. (including a U.S. green card holder)
    A person residing in the U.S.
    An individual who spends a considerable amount of time in the U.S. on a yearly basis.
    NOTE: This is not an inclusive list. Please consult a tax professional for advice on your personal situation.
    U.S. corporations, estates and trusts may also be considered U.S. persons and some transactions may fall within the U.S. person definition, such as standing instructions to transfer funds to an account maintained in the U.S. and frequent transfer/receipt of funds from a U.S. country or territory.
    Account exemptions
    FATCA regulations do not require financial institutions to collect and submit information for every type of account. The account types below are exempt from FATCA:
    Registered Retirement Savings Plans (RRSPs)
    Registered Retirement Income Funds (RRIFs)
    Registered Disability Savings Plans (RDSPs)
    Tax-Free Savings Accounts (TFSAs)
    Personal accounts with less than $50,000 US funds
    Business accounts with less than $250,000 US funds
    Credit cards.
    To confirm whether your Vancity account is exempt from FATCA reporting requirements, please contact us.
    Learn more
    For more information on FATCA, including FAQs and resources, please visit Canada Revenue Agency’s enhanced financial account information reporting page.
    In addition to FATCA, U.S. persons are subject to additional American reporting and tax obligations on income and asset reporting, including filing annual tax returns and other information with the U.S. government. Please consult a tax professional about your obligations as a U.S. person.
    Our commitment
    We take our members’ right to privacy very seriously, and we took a strong position against FATCA. We will continue to work with our regulators and keep our members and employees fully informed so that we can minimize FATCA’s effect on our operations and our members.

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