CRS for non-resident accounts and VDP for CRA

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Apr 1st, 2018 8:14 am

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Mar 30th, 2018 8:10 pm

TorJays [OP]: Jr. Member; Oct 8, 2015; 103 posts; 24 upvotes; Unionville, ON

Mar 30th, 2018 8:10 pm

CRS for non-resident accounts and VDP for CRA

Hi,
I have read recently that Canada and India have signed CRS agreement and will be sharing non-resident account information with each other going forward(Starting with Sep 2018).
I have a couple of questions regarding that :

1) Will India be sharing information from year 2017 onwards and NOT before that ?
2) Should one start reporting interest earned on NRO/NRE accounts on the 2017 CRA tax return ? Will it open can of worms to audit our prior year's CRA returns ?
3) Should one report prior year's interest information through VDP (Volunteer disclosure program ?) even though that information will not be shared by India with Canada ?

I assume many people are being asked to provide CRS TIN (Tax identification) information from their banks for foreign deposit accounts. (I assume India will be sharing information regarding NRO accounts as well even though interest earned in NRO account is taxable in India)

Thanks a lot,

6 replies

Mar 30th, 2018 9:46 pm

jeff1970: Deal Addict; Mar 9, 2012; 4013 posts; 2880 upvotes; Kitchener

Mar 30th, 2018 9:46 pm

I think if you don't report, and India does (or any other country that is signed a CRS with Canada), that's a bigger can of worms.

I guess if a bank shares that you earned $xxxx in interest in whatever year, the CRA might want to know about the other years.

And it's better to go through the VDP and come clean, because if they start an audit or investigation before you do a VDP, then it's a huge issue.

This can of worms will be opened once reporting starts, and that appears to be 2018 with India.

Just wondering, how much interest are we talking about?

Why can't we all just get along?

Mar 31st, 2018 5:23 am

inside: Jr. Member; Aug 19, 2016; 165 posts; 78 upvotes

Mar 31st, 2018 5:23 am

If you have been committing tax fraud by failing to report your India income on your Canadian taxes, and it's more than a couple of bucks of interest, you should definitely use the Voluntary Disclosure Program.

Looks like you're only thinking about doing it now because you've realized you can be caught...

Mar 31st, 2018 5:35 am

FrancisBacon: Deal Addict; May 12, 2014; 3406 posts; 3760 upvotes; Montreal

Mar 31st, 2018 5:35 am

You should understand that the VDP has essentially ended.
Relief has been drastically curtailed.

Also if your account is older than 10 years, it's possible that no relief will be available for those older years.

Mar 31st, 2018 9:49 pm

TorJays [OP]: Jr. Member; Oct 8, 2015; 103 posts; 24 upvotes; Unionville, ON

Mar 31st, 2018 9:49 pm

thanks for your responses.

VDP is for the purpose of disclosure if there is a potential of penalty but in this case, the tax is already deducted in India and based on Tax treaty it will not be double taxed, so shouldn't come under 'potential for penalty'
But if I understand correctly CRS will only share the information regarding account and earned interest but will not share the tax information for taxes paid in India. This is the issue. if CRS would contain tax paid as well then it's not an issue. if that information can not be submitted using VDP then what is the alternate ?

Apr 1st, 2018 6:50 am

FrancisBacon: Deal Addict; May 12, 2014; 3406 posts; 3760 upvotes; Montreal

Apr 1st, 2018 6:50 am

First, even if tax was paid you had to have been filing properly.

Second, if you had over $100,000 you had to declare it even if no tax was due.

Third, you claim taxes were paid. Do you have proof? Ie have you kept documentation going back x years?

Assuming that the amount is in any way substantial, this will definitely not be a "do it yourself" project.
You need to run, not walk, to a lawyer (not an accountant).

Apr 1st, 2018 8:14 am

mrtrump: Sr. Member; Oct 19, 2016; 650 posts; 208 upvotes; Toronto

Apr 1st, 2018 8:14 am

If you have earned interest, it would be a wise decision to declare it in tax return for 2017.

With CRS it shows, the world is moving towards more information sharing.

TorJays wrote: ↑
1) Will India be sharing information from year 2017 onwards and NOT before that ?
2) Should one start reporting interest earned on NRO/NRE accounts on the 2017 CRA tax return ? Will it open can of worms to audit our prior year's CRA returns ?
3) Should one report prior year's interest information through VDP (Volunteer disclosure program ?) even though that information will not be shared by India with Canada ?

I assume many people are being asked to provide CRS TIN (Tax identification) information from their banks for foreign deposit accounts. (I assume India will be sharing information regarding NRO accounts as well even though interest earned in NRO account is taxable in India)

Thanks a lot,

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