Reporting of Foreign Bank and Financial Accounts

Are you a Canadian or American that has bank accounts, assets and/or property out of country? If yes, then you should know that the US Report of Foreign Bank and Financial Accounts (FBAR), or the Canadian equivalent, T1135 Foreign Income Verification Statement, are asset reporting forms that must be filed in addition to your tax returns.

In Canada, all residents must report on all assets that are owned outside of Canada with a cost of over $100,000.  This also includes US stocks or mutual funds in a Canadian brokerage.  The penalties are notable for non-disclosure; in Canada, it is up to $2,500 per person if not filed by April 30th.  If you have not filed the T1135, you may submit a voluntary disclosure which helps to avoid penalties. For a detailed Q&A from the CRA web site, click here. A copy of the form is available here: t1135-16e.

If you are American, you must file a FBAR if:

  1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; AND
  2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

A United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Exceptions to reporting requirements, and other details around filing can be found here. The IRS FBAR reference guide can be found here.

Depending on your tax filing status, you may also be required to file a Form 8938. For a comparison of these 2 forms, and information on penalties, click here.

If you are Canadian or American and hold any assets out of country, your best practice is to work with a certified accountant who is well versed in Canadian and US tax laws, who can assist you with the required disclosures.

Thank you to Frank St-Amand, Senior Accountant, from BDO Canada LLP for assisting in providing this great information. If you have any questions about this topic or any other tax questions, Frank can be reached via email: FStamand@bdo.ca.