Common Reporting Standard (CRS)

Starting July 1, 2014 the Foreign Account Tax Compliance Act (FATCA) required financial institutions to identify clients who are U.S. Persons by examining client information containing any indication of U.S. Person status, followed by obtaining client attestation of U.S. Person status.

Similar to the Common Reporting Standard (CRS) as of July 1, 2017, FATCA requires personal clients, as well as business clients and their controlling persons to declare their U.S. Person status as part of the account opening process.  

CIBC is required to report account details of clients and controlling persons who are U.S. Persons to the Canada Revenue Agency (CRA). The CRA subsequently shares this information with the Internal Revenue Services (IRS).

CRS requires financial institutions to identify clients who are residents of foreign countries other than the United States. CIBC identifies such clients by obtaining client attestation of foreign tax residency as part of the account open process. CIBC reports client information and account details to the CRA. Once the CRA receives this information they will share this information with the various countries that are also participating in CRS and have an information exchange agreement with Canada.

Both FATCA and CRS are efforts to fight tax evasion and improve tax compliance. FATCA focuses on clients who are U.S. Persons, whereas CRS applies to clients who are foreign tax residents, other than the U.S.

Clients of financial institutions have an obligation to provide tax residency information as part of the regulatory requirements of FATCA and CRS. As a CIBC client you will be asked to declare your tax residency as part of the account opening process or when you change certain personal information on file. In some cases additional documentation may be required. Client and account details of foreign tax residents and U.S. Persons will be reported to the CRA.

A U.S. Person is an individual or a business who is obligated to pay taxes in the U.S. as a consequence of citizenship or residency.

Individual Clients:

U.S. Persons include U.S. citizens (including persons with dual or multiple citizenships), U.S. resident aliens, most persons born in the U.S. that have not renounced their citizenship, U.S. lawful permanent residents or persons who meet the Substantial Presence Test for U.S. Residency.

Business Clients (and controlling persons where applicable):

U.S. Persons include an individual who is a U.S. citizen or U.S. resident alien, a partnership, corporation, company, or association created or organized in the U.S. or under the laws of the U.S., an estate (other than a foreign estate), or a domestic trust.

Tax residency refers to the country in which an individual, business or other entity, including individuals who have a controlling interest in the entity, is subject to taxation due to residency. In general, an individual is a tax resident of the country where he/she lives, not where the individual invests. Similarly, a business is generally a tax resident of the country where the business was incorporated.

Each country has unique rules to determine tax residency and an individual or business is responsible for determining the tax residency rules applicable in their situation and ensuring the accuracy of the information submitted to CIBC.

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Under the Income Tax Act—Part XIX (CRS) and Part XVIII (FATCA)—financial institutions are required to report clients to the CRA who are tax residents in another country other than Canada, together with their financial account information. The CRA will then share this information with relevant participating countries.

A person born in the U.S. is generally a U.S. Person due to citizenship, regardless of their residence outside the U.S. It is however possible to relinquish your U.S. citizenship by applying for a Certificate of Loss of Nationality of the United States. A copy of this certificate must be presented to your financial institution to remove your U.S. Persons status.

Yes, business clients opening new accounts will need to provide tax residency and TIN information for the business. In situations where the business is a Passive Non-Financial Entity (NFE), controlling persons of the business will also need to provide their tax residency information. CIBC will report business client account and controlling person information to the CRA where applicable.

A controlling person is the natural person who exercises control over a business. For example owners of private corporations, trustees and beneficiaries.

A Passive NFE is a business client whose main source of income (more than 50%) is generated from holding financial instruments earning dividends and interest, otherwise known as passive income, or more than 50% of its assets held are used to produce passive income, e.g. certain family trusts or holding companies.

An Active NFE is a business client whose main source of income (more than 50%) is generated from the sale of goods and/or services, and, less than 50% of assets held are used to produce passive income e.g. restaurants and retailers.

Financial institutions are obligated by law to identify if any beneficial owner or controlling person of the business is a non-resident of Canada for tax purposes.

The following information will be reported to the CRA:

Individual Accounts:

• Name
• Address
• Account Number(s)
• Tax Identification Number(s)
• Country of Tax Residency
• Investment Income for the tax year
• Gross Proceeds on the sale of investments for the tax year
• Value of the account as of the end of the tax year

Entity Accounts:

• Name
• Address
• Account Number(s)
• Tax Identification Number(s)
• Country of Tax Residency
• Investment Income for the tax year
• Gross Proceeds on the sale of investments for the tax year
• Value of the account as of the end of the tax year
• Controlling person’s name
• Controlling person’s address
• Controlling person’s tax identification number(s)
• Controlling person’s country of tax residency

Depending on when you provided the IRS W form, this information was used to satisfy requirements for U.S. withholding tax purposes and possibly FATCA reporting requirements as well. With the implementation of CRS, CIBC is now also required to collect tax residency information for all non-resident account holders. Additionally, if you have a change in circumstance (e.g., you change your address to the U.S.) CIBC will need to re-confirm your tax residency information.