At the beginning of 2019, we posted an alert (“Americans Living in Canada: CRA Shares 1.6 Million Banking Records with the IRS”) about the Canada Revenue Agency (CRA) having shared more than 1.6 million Canadian bank records of Americans with Canadian bank accounts, including Americans living in Canada, with the US Internal Revenue Service (IRS) between 2014 and 2017. This provision of information is pursuant to the US Foreign Account Tax Compliance Act (FATCA) and the implementation of this Act through the FATCA Intergovernmental Agreement (IGA) between Canada and the United States.
In 2018, the CRA reports that it shared 900,000 Canadian bank records of Americans with Canadian bank accounts with the IRS. This represents a 50% increase in comparison with 2017 in which the CRA shared 700,000 such records with the IRS. The records include names, addresses, account numbers, balances, interest and other income. Account holders are not automatically informed when their financial institutions and the CRA share their records under FATCA and the IGA.
This exchange of information is in parallel to US taxpayers’ obligations to file Foreign Bank Account Reports (FBARs) with US Treasury to disclose all foreign (non-US) bank and investments with an aggregate balance in excess of $10,000 USD (even for one day of the year). It must be emphasized that a US taxpayer, including an American living in Canada, who fails to file FBARs when required to do so can face draconian penalties even if his or her records are shared with the IRS by a tax authority such as the CRA.
If you are an American living in Canada or a Green Card holder or you have links to the United States such as having been born in the United States or to a US citizen parent, we strongly recommend that you consult one of our experienced cross border professionals to determine your exposure to FACTA and to ensure that you are compliant with your US tax filing obligations.
The comments offered in this article are meant to be general in nature and are not intended to provide legal advice regarding any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate for your circumstances.
About the author
Shlomi Steve Levy is a Partner of Levy Salis LLP and is a member of the Quebec Bar, the Law Society of Ontario (L3), the Society of Trust and Estate Practitioners, and the Canadian Bar Association.
Sergei Titorenko is an Associate at Levy Salis LLP and a member of the Quebec Bar. He devotes his practice to US and Canadian tax and estate planning, Canadians doing business in the United States, Americans living in Canada, US real estate transactions for Canadians, and cryptocurrency transactions.