Sharp increase in records sent from CRA to US tax authorities under FATCA

Tuesday, 12 November 2019
The number of Canadian records shared with the US tax authorities under the Foreign Account Tax Compliance Act (FATCA) has increased sharply for the 2018 tax year, Canadian national news broadcaster CBC has reported.

For the 2018 tax year, the Canada Revenue Agency (CRA) sent 900,000 records of Canadian residents to the US Internal Revenue Service (IRS), taking the overall total up to 2.6 million records since information sharing between the two countries under FATCA started in 2014.

CBC reports that the number of records shared has increased steadily year-on-year, with a sharp increase of nearly a third between 2017 and 2018. Further, it says, the CRA has now updated the number of records shared in 2017 to 700,000: originally, it reported sharing 600,000.

Such records may include names, addresses, account numbers, balances, interest and other income; however, the CRA and financial institutions do not automatically notify people when their information has been shared.

Lawyer John Richardson, co-chair of the Alliance for the Defence of Canadian Sovereignty (ADCS), said to CBC of FATCA: “There is no doubt that it is pushing a lot of people into US tax compliance. It's also pushing a lot of people, when they become aware of this, into straight renunciation of their citizenship.”

The ADCS has already challenged FATCA in the Canadian courts, arguing on behalf of two citizens that Canada's intergovernmental agreements with the US, in which it undertook to implement the provisions of FATCA against Canadian residents, are a breach of its constitution.

However, in the Federal Court of Canada Justice Anne Mactavish ruled that the agreement does not violate Canada's Charter of Rights and Freedoms.

FATCA has also been challenged by “accidental Americans” outside of Canada: the French Association of Accidental Americans appealed against the reporting requirements earlier this year, while a US-born British citizen commenced a crowdfunding campaign to challenge the Act in September.


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