CRA sends 900,000 bank records to IRS

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A controversial information-sharing deal has resulted Canada Revenue Agency sending 900,000 bank records to the IRS.

This marked a third more than it sent the previous year. The records were for the 2018 tax year.

It also has updated the number of records shared for the 2017 tax year to 700,000 from the 600,000 originally reported.

The number of financial records of Canadian residents being shared with the IRS has risen steadily since the information sharing agreement began — from 150,000 in 2014 to 300,000 in 2015 and 600,000 for the 2016 tax year.
To date, Canada has shipped 2.6 million records of Canadian residents who could be subject to U.S. taxes south of the border.

However, the number of records doesn’t necessarily correspond to the number of Canadian residents affected. Some people may have more than one bank account, while some joint accounts could have more than one account holder — including Canadians who don’t have U.S. citizenship.

Etienne Biram, spokesperson for the Canadian Revenue Agency (CRA), said the agency does not know why the number of accounts being flagged by Canadian financial institutions is changing from year to year.

“The CRA is currently analyzing the data to gain a better understanding of the fluctuations in the number of records being reported to the CRA.”
The information transfer is the result of a controversial information-sharing agreement between Canada and the U.S. that was negotiated after the U.S. government adopted the Foreign Account Tax Compliance Act (FATCA).

The law, adopted in a bid to curb offshore tax evasion, obliges foreign financial institutions to report information about accounts held by people who could be subject to U.S. taxes.

Unlike most countries, the United States levies income taxes based on citizenship rather than residency; some Canadians end up facing U.S. taxes because of an American parent, or because they were born in a hospital on the other side of the border.

Following the adoption of FATCA, the Canadian government concluded that an information-sharing agreement would be better than forcing Canadian financial institutions to deal directly with the IRS.

People whose account information is shared with the IRS (names, addresses, account numbers, account balances, interest payments, dividends and other income) are not automatically notified by either their financial institutions or the CRA.

Under the agreement, the IRS is supposed to send the CRA information about U.S. bank accounts held by Canadians. However, the CRA refuses to reveal how many records it has received from the IRS.

The agreement is supposed to apply only to accounts with balances of at least $50,000, Richardson said he believes some institutions are reporting accounts with lower balances. -CINEWS

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