The Foreign Account Tax Compliance Act (FATCA) is a United States tax law adopted in March, 2010 aimed at preventing U.S. taxpayers from evading U.S. taxes by using offshore financial accounts.
Under an agreement signed between Canada and the United States in February 2014, Canada committed to enact a legislation requiring Canadian financial institutions to submit to Canada Revenue Agency (CRA) reports on financial accounts held in Canada by U.S. residents and U.S. citizens (including U.S. citizens resident who are Canadian citizens). This agreement is implemented through the addition of Part XVIII to the Income Tax Act (ITA).
Each year, information on reportable accounts is transmitted by the CRA to the Internal Revenue Service (IRS) in accordance with the provisions of the Convention Between Canada and the United States of America with respect to Taxes on Income and on Capital.
The Common Reporting Standard (CRS) is an international standard developed by the Organization for Economic Co-operation and Development at the request of the G8 and G20 countries in 2014. It aims to combat tax evasion and promote voluntary compliance with tax laws through the automatic exchange of financial account information between participating countries. Canada, along with over a hundred other countries, has committed to implementing it.
The CRS is implemented in Canada by the addition of Part XIX to the ITA, which came into force on July 1, 2017. Consequently, Canadian financial institutions are required to implement procedures to document tax residence and report to the CRA the financial accounts they maintain for residents of participating jurisdictions or for certain entities controlled by residents of those jurisdictions. Subsequently, the CRA exchanges the reportable information with the jurisdictions with which it has signed agreements under the CRS.
Protection of Privacy
The data exchanged under FATCA and CRS are subject to the privacy laws applicable to each jurisdiction. Relevant information is provided to the CRA in a fashion similar to the tax information returns that financial institutions already provide to the CRA about their clients. The information is confidential and may only be used for the purposes of the application of the terms of the ITA.
Laurentian Bank / Laurentian Bank Securities Commitment
Laurentian Bank is required to have procedures in place to document the tax residence of its account holders and to report the required information to the CRA. We have put the required measures into place to ensure our compliance, while minimizing any impact on client service.
For more information regarding this new regulation, please consult