Why is CRA sending Canadian banking records to the IRS?

Canadian media outlets and some very credulous and/or malicious Opposition politicians are making a great deal of the increasing numbers of account records from Canadian financial institutions that are being transferred to the US revenue authorities (the IRS) under the Enhanced Exchange of Information Agreement between our countries.

The increasing number has caused consternation. It relates to the increasing abilities of Canadian financial institutions to identify “Specified U.S. Persons” who are customers, and the reason the numbers climb higher is that the same records are transferred every year. In other words, as new accountholders are identified, they are added to those of previously identified accountholders, and everyone’s info is sent together. Since people are not likely to close accounts simply because FATCA information has been provided to the IRS, the number is likely to go up until such time as Canadian financial institutions are able to solidly identify all Specified U.S. Persons in their system: but despite “Know Your Client” obligations, it’s rarely immediately obvious to a Canadian bank who is a U.S. citizen and who is not. Although they are increasingly capturing such information themselves.

Those intimating that the sky is falling over this have massively overstated the concern to Canadians.

If you are a U.S. citizen, whether or not you have a passport or ever visit the U.S., you may have U.S. tax obligations. As always, U.S. citizens living overseas who do not file returns with the IRS are encouraged to consult a tax advisor.

Written by Craig Burley

Craig is a tax lawyer in private practice in Hamilton, Ontario. Call Craig at (905) 296-3378 to discuss issues that you think may need independent tax advice. In addition to tax, Craig writes and works publicly on a number of other issues related to law, justice, and public affairs.

Website: http://craigburley.com