FAQ on anti-tax evasion

Q: Why do FATCA and the CRS apply to Desjardins?

The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) apply to Desjardins and all other Canadian financial institutions for a number of important reasons: Legal compliance: As a result of amendments to the Income Tax Act , all Canadian financial institutions must comply with FATCA and the CRS. These regulations are aimed at preventing tax evasion by requiring the reporting of financial accounts held by individuals with foreign tax residence and/or US citizenship. Information exchange: FATCA requires financial institutions to identify and report accounts held by US citizens or tax residents to the Canada Revenue Agency (CRA), which will in turn provide this information to the US Internal Revenue Service (IRS). The CRS—a multilateral agreement covering more than 100 countries—requires all financial accounts held by the tax residents of other signatory countries to be reported. Fiscal integrity: These regulations help countries maintain the integrity of their tax systems by ensuring adequate reporting and taxation of foreign assets.

Q: What are the main differences between the CRS and FATCA?

The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) are international tax reporting standards aimed at preventing tax evasion. However, there are some notable differences between the two: FATCA CRS Source US legislation enacted in 2010 by the US Congress. It applies to financial institutions worldwide, but only for US taxpayers. OECD initiative launched in 2014 and adopted by more than 100 countries. Applies to tax residents of all participating countries. Target Citizens, permanent residents and US entities. Tax residents of all participating countries. Reporting relationship Financial institutions send information on accounts held by US citizens or residents to local tax authorities, which in turn send it to the IRS (US). Financial institutions send information on accounts held by foreign tax residents to local tax authorities, which in turn send it to the countries concerned. Main objective Combat tax evasion by US taxpayers. Strengthen global tax transparency.

Please note that this information does not constitute tax, legal, or financial advice. For personalized guidance, please consult a tax advisor outside of Desjardins.

Why do FATCA and the CRS apply to Desjardins?

The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) apply to Desjardins and all other Canadian financial institutions for a number of important reasons:

Legal compliance: As a result of amendments to the Income Tax Act, all Canadian financial institutions must comply with FATCA and the CRS. These regulations are aimed at preventing tax evasion by requiring the reporting of financial accounts held by individuals with foreign tax residence and/or US citizenship.
Information exchange: FATCA requires financial institutions to identify and report accounts held by US citizens or tax residents to the Canada Revenue Agency (CRA), which will in turn provide this information to the US Internal Revenue Service (IRS). The CRS—a multilateral agreement covering more than 100 countries—requires all financial accounts held by the tax residents of other signatory countries to be reported.
Fiscal integrity: These regulations help countries maintain the integrity of their tax systems by ensuring adequate reporting and taxation of foreign assets.

What are the main differences between the CRS and FATCA?

The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) are international tax reporting standards aimed at preventing tax evasion. However, there are some notable differences between the two:

	FATCA	CRS
Source	US legislation enacted in 2010 by the US Congress. It applies to financial institutions worldwide, but only for US taxpayers.	OECD initiative launched in 2014 and adopted by more than 100 countries. Applies to tax residents of all participating countries.
Target	Citizens, permanent residents and US entities.	Tax residents of all participating countries.
Reporting relationship	Financial institutions send information on accounts held by US citizens or residents to local tax authorities, which in turn send it to the IRS (US).	Financial institutions send information on accounts held by foreign tax residents to local tax authorities, which in turn send it to the countries concerned.
Main objective	Combat tax evasion by US taxpayers.	Strengthen global tax transparency.

What is a tax residence?

In general, an individual’s tax residence is the country in which they usually reside and/or in which, according to the laws of that country, they should be paying taxes. In the United States, tax residence is also linked to US citizenship.

For an entity (such as a corporation, partnership or trust), its tax residence is generally the country in which it must pay taxes under the laws of that country due to its head office, incorporation or similar criteria.

Note: A member or client may have more than one residence for tax purposes.

What is a declaration of tax residence?

A declaration of tax residence or self-certification is a statement from the account holder that provides information about their identity, their residence status and any other information required by the financial institution to meet its anti-tax evasion obligations.

Which members or clients are required to make a declaration?

As a Canadian financial institution, Desjardins is required to comply with the United States Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS).

This may concern you if:

You are a US citizen, or
You are a tax resident of a country other than Canada

In these cases, Desjardins must report certain information to the Canada Revenue Agency (CRA), which will forward it to the appropriate tax authorities.

What about businesses?

Desjardins must also declare business accounts if:

The business is based outside Canada, or
The people who control the business (owners, directors, etc.) are US citizens or tax residents of another country

I have financial interests in several countries and/or the United States. Can my Desjardins advisor or representative help me determine my tax residence?

Depending on the situation, the rules for determining the tax residence can be complex. Financial institutions, including Desjardins, cannot provide advice to their members and clients for this reason.

If you’re unsure about your tax residence, please consult the following guide:

Guide for determining tax residence

This guide asks a series of questions to help you determine your tax residence:

Are you a citizen of a country other than Canada?
Do you own or rent a residence in another country?
Do you have a spouse or common-law partner in another country?
Do you have any dependents in another country?
Have you lived outside Canada in the past 12 months?
Do you have any personal belongings (car, furniture, clothes, etc.) in another country?
Do you have social ties (member of recreational or religious organizations, etc.) in another country?
Do you have economic ties (foreign employer, credit card, bank account, etc.) in another country?
Do you have a foreign driver’s licence?
Do you have health insurance in another country?
Have you ever worked or provided services outside Canada?

If you answer “yes” to any of the questions, or are unsure, please consult a tax advisor outside Desjardins to determine your tax residence. Note that answering “no” to any of the questions doesn’t necessarily mean that you’re not a foreign tax resident.

I’m a holder of a joint account and one of the joint account holders is reportable under FATCA and/or CRS. How is this information handled?

For joint accounts, each account holder’s situation is assessed separately. Therefore, if one of the joint holders is reportable under FATCA and/or CRS, only that member’s or client’s tax residence information will be forwarded to the CRA, for the total balance of the joint account.

I’m only a resident of Canada for tax purposes. Do I still need to provide information about my tax residence?

Yes. All holders of reportable financial accounts must provide their information through a declaration of tax residence, also known as self-certification, attesting to your Canadian tax residence, within the prescribed timeframe.

How often do I have to provide the required information?

Tax residence information is collected when you open a reportable financial account and remains valid as long as no changes are made to your tax residence status. You have 30 days to notify Desjardins of any changes that affect your tax residence status. You will then be required to file a new declaration of tax residence.

What is a taxpayer identification number (TIN) or functional equivalent?

A TIN or functional equivalent is a unique identifier made up of letters and/or numbers that a country assigns to an individual or a business for tax purposes. For example, in Canada:

For an individual, the TIN is their social insurance number

For a business (organization or general partnership), the TIN is the business number (BN)

For a trust, the TIN is a trust account number that starts with the letter “T”

What type of information will be reported to the CRA?

The following data is reported to the CRA for account holders with at least one tax residence other than Canada, or US citizenship:

Data identifying the financial account holder: name, address, country of residence for tax purposes, date of birth, tax identification number (TIN) or reason for not having a TIN

Financial information about the account, like the account number, balance or value at the end of the year, some amounts paid or credited such as interest or dividends

What accounts and products are reportable?

Many accounts and products are subject to these regulations, including:

Chequing accounts – Banking services
Guaranteed investment certificates (GICs)
Credit cards with a credit balance (unless the limit is US$50,000 or the credit balance is reimbursed within 60 days)
Reloadable prepaid cards (individuals only)
Securities brokerage accounts
Mutual funds
Asset custody

Do I need to be concerned about the confidentiality of my personal data?

No. Desjardins is subject to strict federal and provincial privacy laws. Information collected from you and provided to the CRA is strictly limited to the information required under Canada’s Income Tax Act. Desjardins will apply the necessary security measures when sharing this type of information.

I’m a temporary visitor to the US. Am I reportable under FATCA? (For example, students or retirees wintering in the US [snowbirds]).

If you’re a resident of Canada and confirm that any US address, phone number or bank transfer related to your account is used only for temporary visits to the US, you remain a Canadian resident for tax purposes and are not subject to FATCA reporting. If you’re unsure, speak to an external tax advisor.

What’s the definition of a US person?

The term “US person” means:

A US citizen or an individual who resides in the United States.
A partnership or corporation organized in the United States or under the laws of the United States or any state thereof.
A trust, if
- A court in the United States would have the authority under applicable law to deliver orders or judgments about substantially all issues regarding the administration of the trust.
- One or more US persons have the authority to control all the trust’s major decisions.
The estate of a person that is a citizen or a resident of the United States.

I was born in the US but have lived in Canada all my life. How does FATCA affect me?

In general, anyone born in the United States is considered an American citizen. You would thus be recognized as a US person.

However, there are exceptions where a person born in the United States is not recognized as such. This includes individuals who have relinquished their US citizenship and have obtained a Certificate of Loss of Nationality issued by the US Department of State or another agency that complies with US legal requirements.

What happens if the required information is not provided?

You may be subject to financial penalties from the Canada Revenue Agency (CRA) if you have a reportable account and do not provide specific information regarding your identity and tax residence when requested.

Where can I get more information?

For FATCA:

For the CRS:

For more information, consult a tax advisor outside of Desjardins.