Desjardins helps combat tax evasion

Tax evasion is the illegal act of deliberately avoiding paying taxes to the government. This usually involves concealing income, funds or assets, exaggerating deductions or filing an incomplete income tax return. Tax evasion is a violation of tax laws and may result in severe penalties, including substantial fines. 

It poses a significant threat to our economic stability, at both the national and international levels. Tax evasion reduces essential government revenues that are required to fund public services and infrastructure. It also promotes economic injustice and undermines public trust in the tax system.

As a Canadian financial institution, Desjardins is required to comply with Canada’s Income Tax Act. More specifically, it must adhere to Parts XVIII and XIX, which incorporate the compliance obligations specified in the United States’ Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS), a global standard established by the OECD.

That means Desjardins is required to obtain valid tax residence declarations (self-certification) from its members or clients for all reportable financial accounts within the prescribed timeframes. In addition, in accordance with the Income Tax Act, Desjardins must report to the Canada Revenue Agency (CRA) all relevant financial accounts for which a foreign tax residence or US citizenship is identified. 

Members and clients with a reportable financial account must confirm their tax residence and provide all required information using a tax residence declaration (self-certification) within the prescribed timeframe. This declaration is required to open a new reportable account and in the event of any change in circumstances that affects the member’s or client’s tax residence.

Parts XVIII and XIX of Canada’s Income Tax Act incorporate the FATCA and CRS requirements, which impose obligations on all Canadian financial institutions, including Desjardins.

On July 1, 2014, an agreement between Canada and the US regarding this US law took effect in Canada. Under the terms of the agreement, Canadian financial institutions must follow procedures to obtain certain information on the tax residence and US citizenship of their members and clients and report it to the CRA. The CRA then receives information on financial accounts held in the US by Canadian residents, which in turn helps fight tax evasion. 

As of July 1, 2017, Canadian financial institutions must comply with the CRS. These institutions are required to gather specific information regarding the tax residency of their members and clients and report it to the CRA. The CRA, in turn, receives data on financial accounts held abroad by Canadian residents, aiding in the global fight against tax evasion.