On 23 January 2019 the Canadian Broadcasting Corporation reported that the Canada Revenue Agency (CRA) has transferred more than 1.6 million Canadian banking records to the US Internal Revenue Service since an information sharing agreement was entered into between the two countries in 2014. The information related to:

  • 150,000 Canadian bank accounts in 2014;
  • 300,000 Canadian bank accounts in 2015; and
  • 600,000 Canadian bank accounts in both 2016 and 2017.

Intergovernmental agreement

The intergovernmental agreement for the enhanced exchange of tax information under the Canada-US Tax Convention, which has been implemented by Canadian legislation, provides lengthy and detailed rules with respect to the information that the Canadian government must transfer to the United States. The agreement generally requires Canada to automatically transfer information regarding Canadian bank accounts with US indicia to the United States each year, unless the Canadian financial institution has obtained a self-certification and supporting evidence establishing that the account holder is not a US citizen or resident for tax purposes. The US indicia includes:

  • identification of the account holder as a US citizen or resident;
  • unambiguous indication of a US birth place;
  • a current US address or telephone number;
  • standing instructions to transfer funds to the United States;
  • a power of attorney or signing authority granted to a person with a US address; and
  • an 'in-care-of' or 'hold mail' address which is the sole address that the financial institution has on file.

The information to be transferred to the United States by the CRA each year includes:

  • the names and addresses of account holders;
  • account numbers;
  • account balances or values; and
  • the amount of interest credited to the account.

Policy justification

The policy justification for the release of this private information to the United States is to assist in combating tax evasion by foreign account holders.

The agreement similarly requires the United States to provide information to Canada. However, the CRA has not disclosed how many records it has received from the United States under the agreement.

The transfer of information is made without notice to Canadian account holders either before or following the transfer. However, the CRA has stated that if requested by a taxpayer, it will confirm whether information pertaining to that individual or entity has been provided to the United States. The CRA has not stated that it will disclose to the taxpayer precisely what information has been transferred.

Once information has been transferred to the United States, a Canadian taxpayer may be left with little remedy, even if they learn that the transfer occurred and even if the transfer is demonstrably non-compliant with the legislation. Therefore, taxpayers must trust and hope that financial institutions and the CRA are operating in complete compliance with the rules.

Section 241 of the Income Tax Act protects taxpayer information in the hands of the CRA from disclosure outside the CRA in some circumstances. However, exceptions to the protection have become increasingly numerous over the years. The transfer of information relating to 600,000 Canadian bank accounts to a single country in a single year demonstrates just how porous this privacy protection is.


The Canadian legislation that permits the automatic transfer of financial information to the United States under the agreement discussed above is currently subject to a constitutional challenge before the Federal Court of Canada. Guidance from a trial court, and perhaps even an appellate court, is important to ensure that intergovernmental agreements for the sharing of financial information do not sacrifice privacy in a manner that fails to protect constitutional rights.

For further information please contact Greg DelBigio or Jennifer Flood at Thorsteinssons LLP by telephone (+1 604 689 1261) or email ( or The Thorsteinssons LLP website can be accessed at

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