# Moving money from US banks to Canada



## james4beach (Nov 15, 2012)

I'm employed in the USA and my employer makes payroll deposits to my chequing account at a US bank. Taxes have been paid on all these payroll deposits. Occasionally, I write large personal cheques to myself drawn from this US bank, and deposit them at a Canadian bank. I use this as a no-fee way to transfer money north of the border. Cheque sizes vary from 5K to 15K each, and I've transferred around 100K like this so far. I write each of them the same way and indicate in the Memo that this is a transfer to myself.

I also file FBAR disclosure of my Canadian accounts with the USA. So the Canadian account which is the destination of these cheques is properly disclosed to the US government.

Is this all proper and legal? Am I in compliance with the various crazy American laws?

There are some laws around Structuring and Smurfing which make it illegal to break up large deposits into smaller amounts for the purpose of evading bank reporting requirements (Bank Secrecy Act in USA, and FINTRAC in Canada). I really hope nobody would claim I'm doing this but I worry about the perception of my 5K to 15K cheques, over time, adding up to large amounts. They come in these units because I am accumulating paycheques.

Can anyone comment on this? Thanks


----------



## gt_23 (Jan 18, 2014)

The US bank would automatically report your transactions via Fincen. As for the fbar, I thought it was for US citizens, however, even if you choose to report Cdn a/cs to the US authorities, there is virtually no way today that they could find out if you hadn't reported them, as fatca reporting from your Cdn bank to US authorities would only occur if you were a US citizen.

Regarding fincen or fintrac non-reportable transfers under $10k, they are not automatically reported, so it would be up to the individual banks to alert the authorities if they deemed it suspicious anyway. If you have regular payroll deposits and transfers, this is very unlikely, as your banks would have access to all that information as well. hth


----------



## fatcat (Nov 11, 2009)

james4beach said:


> I'm employed in the USA and my employer makes payroll deposits to my chequing account at a US bank. Taxes have been paid on all these payroll deposits. Occasionally, I write large personal cheques to myself drawn from this US bank, and deposit them at a Canadian bank. I use this as a no-fee way to transfer money north of the border. Cheque sizes vary from 5K to 15K each, and I've transferred around 100K like this so far. I write each of them the same way and indicate in the Memo that this is a transfer to myself.
> 
> I also file FBAR disclosure of my Canadian accounts with the USA. So the Canadian account which is the destination of these cheques is properly disclosed to the US government.
> 
> ...


off the top of my head it appears that you might be in violation of USCC (US Commercial Code) 104.3 and 104.4, both of which are contained within FINTRAC regarding out-of-country currency transfers

whether of not the FBAR mitigates this i don't know

my tax guy had me do several pages of USCC disclosures, took me forever

the fines are not in the league of FBAR though which is good


----------



## Eclectic12 (Oct 20, 2010)

gt_23 said:


> ... As for the fbar, I thought it was for US citizens ...


From the threads here on CMF in the taxation section, FBAR is for "US persons" which can mean a US citizen or someone with a Green card or someone who passes the substantive presence test who has to file a US tax return.




gt_23 said:


> ... however, even if you choose to report Cdn a/cs to the US authorities, there is virtually no way today that they could find out if you hadn't reported them, as fatca reporting from your Cdn bank to US authorities would only occur if you were a US citizen.


Problem is that in the OP's case ... he is working in the US, depositing money in the US and filing a US tax return where he is claiming a closer connection to Canada. The IRS is *already* getting information that flags him as a "US person" as defined by the legislation. The closer connection is letting them know that he *has* Canadian account. I'm sure at some point, there will be computer programs setup to scan to make sure that that matching info is flowing from CRA to the IRS for the Canadian accounts. 

He could hope he slips through the cracks but the penalties make it a huge problem when they get around to him ... not to mention that they can probably easily garnish his US wages.


Cheers


----------



## james4beach (Nov 15, 2012)

Wait a second, what's this about slipping through the cracks? I don't understand. I'm not trying to slip through any cracks or evade any rules. I've looked into FBAR very thoroughly and I definitely must file it, so I will keep filing it.

I'm just trying to figure out if I've missed anything else.



> off the top of my head it appears that you might be in violation of USCC (US Commercial Code) 104.3 and 104.4, both of which are contained within FINTRAC regarding out-of-country currency transfers


Wow I never even heard of this. I searched around and couldn't find any articles by those numbers. How would I figure out if this is an issue for me and whether I must do anything?


----------



## fatcat (Nov 11, 2009)

james4beach said:


> Wait a second, what's this about slipping through the cracks? I don't understand. I'm not trying to slip through any cracks or evade any rules. I've looked into FBAR very thoroughly and I definitely must file it, so I will keep filing it.
> 
> I'm just trying to figure out if I've missed anything else.
> 
> Wow I never even heard of this. I searched around and couldn't find any articles by those numbers. How would I figure out if this is an issue for me and whether I must do anything?


you don't need to do a thing because i made it up to mess with your worried little head james ... nevertheless, i am pretty sure you are violation of 2 or 3 laws that neither you nor i know anything about

it is axiomatic that if you sit down with the tax man in the small audit room, it doesn't matter how good you are, he will find something you missed

besides, your money is in canada right ? ... i am assured constantly by the fbar resisters that our government will never let the mean old irs come up here and demand our money, it will never happen so don't you worry james

go to one of those legal pot stores and buy yourself a giant spliff and take a puff ... everything is gonna be fine

remember alfred e neuman's motto ... "What? Me worry?"


View attachment 7626


----------



## james4beach (Nov 15, 2012)

fatcat I had a suspicion you were messing with me!

I had a few joints last night with friends... all's good.


----------



## gt_23 (Jan 18, 2014)

Eclectic12 said:


> Problem is that in the OP's case ... he is working in the US, depositing money in the US and filing a US tax return where he is claiming a closer connection to Canada. The IRS is *already* getting information that flags him as a "US person" as defined by the legislation. The closer connection is letting them know that he *has* Canadian account. I'm sure at some point, there will be computer programs setup to scan to make sure that that matching info is flowing from CRA to the IRS for the Canadian accounts.
> 
> Cheers


Not sure what any of that means....I've worked in the US both as a traveller and renting an apartment at various times for US LE of Cdn corp. The accountant the company hired filed all the tax returns with the IRS and took care of the sales tax etc., but I never reported money transfers to Canada, they were always automatically reported anyway if over $10k. I also didn't report foreign assets, since they weren't foreign to me as a Canadian citizen and resident (still owned Cdn residence).

Regarding an expansion of fatca-like legislation for Canadians, this is highly doubtful - the cost/benefit does not justify it like it does for US citizen and Europeans. Certainly not something I would worry about at this stage.


----------



## AltaRed (Jun 8, 2009)

gt_23 said:


> I also didn't report foreign assets, since they weren't foreign to me as a Canadian citizen and resident (still owned Cdn residence).


To be clear for others (and not related to moving money), that only applies IF a non-resident of the USA, i.e. Non-resident Alien and filing of a NR-1040. For people that work in the USA and considered a Resident Alien for tax purposes, there is an obligation to fill out Treasury (not IRS) forms each year on 'foreign' assets held abroad. There were huge penalties for not doing so.


----------



## james4beach (Nov 15, 2012)

And following up to AltaRed, more broadly, you must report your FBAR foreign assets (Canadian/non-US bank and investment accounts) if you're either a US citizen, or a "US Person" by virtue of passing the substantial presence test.

Many Canadian snowbirds who spend too much time in the USA, become US Persons and must file FBAR. It makes no difference whether they are exempt from US taxes due to closer connections. If you exceed the substantial presence test e.g. over 31 days in the USA this year, you must file FBAR.

For example, by claiming Canadian jurisdiction under the tax treaty, I file 1040NR -- I'm a US nonresident for tax purposes. However my accountant assures me I must still file FBAR. This is because FBAR is not a tax requirement but rather a Treasury department requirement. Exemptions under tax law do not exempt you from FBAR.

The penalties for failing to file FBAR can be really large. As the USA grows more desperate for income they are more aggressively pursuing non-filers. You absolutely must watch out for this one, even as a US visitor. We're talking about $10,000 penalty per failure to file. If you have a dozen accounts you could face penalties of hundreds of thousands of dollars.

Most Canadian visitors to the USA are unaware of this. You must be really, really, really careful if you decide to visit the USA. Visiting America can be lethal to your financial health. Remember this isn't a tax issue ... FBAR is not a tax form. It's the Treasury department.


----------



## Eclectic12 (Oct 20, 2010)

james4beach said:


> Wait a second, what's this about slipping through the cracks? I don't understand. I'm not trying to slip through any cracks or evade any rules.


Sorry if I did not confirm that you don't want to slip through the cracks ... my point was that the advice that reporting could be skipped, given all the info the IRS has, is likely suspect.


Cheers


----------



## RBull (Jan 20, 2013)

james4beach said:


> And following up to AltaRed, more broadly, you must report your FBAR foreign assets (Canadian/non-US bank and investment accounts) if you're either a US citizen, or a "US Person" by virtue of passing the substantial presence test.
> 
> Many Canadian snowbirds who spend too much time in the USA, become US Persons and must file FBAR. It makes no difference whether they are exempt from US taxes due to closer connections. If you exceed the substantial presence test e.g. over 31 days in the USA this year, you must file FBAR.
> 
> ...


You've missed arguably the most important part of the substantial presence test. Part 2. 

This makes your post somewhat misleading in stating singularly CDNs visiting the US over 31 days must file Fbar. Not necessarily true as part 2 and the example shows. I agree CDN's must be careful and there are probably plenty not aware of the rules, but there is more time in the US allowable than the 31 days you refer to. 

Substantial Presence Test

You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
All the days you were present in the current year, and
1/3 of the days you were present in the first year before the current year, and
1/6 of the days you were present in the second year before the current year.


----------



## NorthernRaven (Aug 4, 2010)

james4beach said:


> And following up to AltaRed, more broadly, you must report your FBAR foreign assets (Canadian/non-US bank and investment accounts) if you're either a US citizen, or a "US Person" by virtue of passing the substantial presence test.
> 
> Many Canadian snowbirds who spend too much time in the USA, become US Persons and must file FBAR. It makes no difference whether they are exempt from US taxes due to closer connections. If you exceed the substantial presence test e.g. over 31 days in the USA this year, you must file FBAR.


For clarity, the substantial presence test reads "31 days during the current year *AND*..." a 3-year 183 day total with diminished weighting on the previous years. So someone who does a one-time 45-day holiday in the US wouldn't trigger this, and as the IRS example shows, if you don't exceed 120 days annually you can't trigger a positive result even on the cumulative clause.


----------



## fatcat (Nov 11, 2009)

at some point the usa is going to wake up form its fever dream and realize that putting up barriers to having people visit their country and spend money isn't a good idea and we see some pullback on this stuff

also there is legislation exempting us citizens who live in another country from being required to file fbar's on accounts they hold in their country of residence (but not outside of it)

hopefully we will see reform


----------



## RBull (Jan 20, 2013)

I agree with you fatcat. This is very bad policy and really makes little sense why a country would discourage non resident people from visiting for long and discourage spending substantial money to boost the US economy. 

I also think reform will happen at some point.


----------



## james4beach (Nov 15, 2012)

Thanks for the clarifications about the substantial presence test.

fatcat and I have both gone through the 5 stages on this one. I pushed through step 4 (Depression) and have finally come to step 5 (Acceptance).

I will now happily file my FBARs and everything else they want. The threats and fear of penalties has successfully won me over.

But I sure as hell won't bring any of my capital to the USA. In fact I've taken nearly 100K out of the USA, which is what I started this thread about. If they want to attract my capital & spending back, they're welcome to. But as long as these policies continue I will keep removing capital from the USA and shipping it home to B.C. and Manitoba!


----------



## Eclectic12 (Oct 20, 2010)

From a practical standpoint, I'm thinking that as long as the bank account is not too large and the transfers are like clockwork - it should be easy to argue that it's employment income being shipped back to Canada.

But then again, some of the US legislation can be a pain.



Cheers


----------



## james4beach (Nov 15, 2012)

Thanks for that thought. Do you mean as long as the source bank account (the one in the US) is not too large?

My deposits have been irregular. I should make them more regular.


----------



## fatcat (Nov 11, 2009)

james, i don't think things have gotten this bad have they ?

you describe a hard working tax-paying (god knows, you are not only a tax paying guy but you regularly condcut an audit to see if there are even more forms to fill out, no one can fault you on diligence) guy who uses a time-tested, completely legal and simple way to move money back to the country he was born in and where all of his assets are located

furthermore the money is moving _out of the usa_ _not in_ which is the prime concern most of the time since inbound funds can be used for terrorism

if anyone would likely be concerned it should be canada and fintrac

i don't get the concern, do you have any idea how many individual transactions cross the border between canada and the usa ? ... it is going to be a very large number and they can quickly see your employment and all the information you have available

why do you think you are going to be a target ?


----------



## james4beach (Nov 15, 2012)

fatcat thanks that helps me feel better. I'm glad to hear it's a common method.

My concern comes from an anxiety I feel around US taxes. Remember last year when I first discovered this US stuff? Oh man, was that rough.

I'm perfectly happy to acknowledge this is an unfounded and irrational fear. Maybe I need to smoke pot more often!


----------



## fatcat (Nov 11, 2009)

james4beach said:


> fatcat thanks that helps me feel better. I'm glad to hear it's a common method.
> 
> My concern comes from an anxiety I feel around US taxes. Remember last year when I first discovered this US stuff? Oh man, was that rough.
> 
> I'm perfectly happy to acknowledge this is an unfounded and irrational fear. Maybe I need to smoke pot more often!


getting righteously stoned is often the right approach to many of this life's problems

i tend to get a little paranoid but do indulge when i have my recurring stomach problems which pot inevitably helps

i really cannot see a scenario where you, sending cheques back to canada now and then would arouse suspicion, as i say, it is inbound flows that really have the usa worried, also cheques are easily traceable and not a good method for hiding/moving money

now, if you were taking 15K to a bitcoin exchange every month on a regular basis, that would be a different story :biggrin:


----------



## Robillard (Apr 11, 2009)

gt_23 said:


> Regarding an expansion of fatca-like legislation for Canadians, this is highly doubtful - the cost/benefit does not justify it like it does for US citizen and Europeans. Certainly not something I would worry about at this stage.


Canada has signed on to participate in exchanging account information under the OECD's common reporting standard, which involves financial information similar to FATCA. I think the first exchange will take place in 2017 or 2018.


----------



## Eclectic12 (Oct 20, 2010)

james4beach said:


> Eclectic12 said:
> 
> 
> > From a practical standpoint, I'm thinking that as long as the bank account is not too large and the transfers are like clockwork - it should be easy to argue that it's employment income being shipped back to Canada.
> ...


Yes ... I expect that one can argue that the US bank account $$$ are what is being lived one and everything else is being shipped home.

I know of people form from El Salvador or the Philippines who are supporting family back home in a similar manner so I expect this would be an easy argument to make.
Canada isn't a poverty stricken country to be shipping money to but since you already have on file from the tax returns that Canada is the "closer connection", it should work the same.


If you had an unreasonable amount in the US bank (ex. $500K) then I could see the intent being questioned.


Cheers


----------



## Eclectic12 (Oct 20, 2010)

gt_23 said:


> Not sure what any of that means ...


The way I read post # 2, the nutshell of what you were saying was that:

1) Fbar applies only to US citizens.

2) Even if it does, the OP can choose to skip it as the IRS won't know about Canadian assets.


For point #1, Fbar applies to more than US citizens considering that ...


> Green Card holders face risk of non-renewal or revocation of their Green Card (permanent residence status) if they *failed to file a Report of Foreign
> Bank Account (FBAR)*. This may come has headline news to some permanent residents and their advisors even though permanent residents are required to
> comply with income tax reporting as a condition of their immigration status.


http://www.jdsupra.com/legalnews/fbar-violation-puts-green-card-holders-02970/

Or to use the language I did ...


> Under FATCA, all *U.S. persons (and that includes green card holders!)* ...


http://www.taxindiainternational.com/columnDesc.php?qwer43fcxzt=MjE=


For point #2, the OP is filing a US tax return where he is claiming the closer connection to Canada. It seems pretty clear to me that the IRS *has* to know
that there are Canadian assets as the US tax return is telling them so. It would not seem difficult for the IRS to question how there could be employement 
income in the US, few assets in the US yet no Fbar forms are being filed. 

In the OP's case, as per the tax specialist's advice - he is filing the Fbar forms.





gt_23 said:


> ... I've worked in the US both as a traveller and renting an apartment at various times for US LE of Cdn corp. The accountant the company
> hired filed all the tax returns with the IRS and took care of the sales tax etc...


FATCA and Fbar came in around March 2010 so if like me, the consultation was done prior to this ... there would be no mention of it.

The OP has consulted tax specialists in the last year or so where the feedback has been that he *has* to file Fbar reports. I leave it to the OP to 
provide more details.




gt_23 said:


> ... but I never reported money transfers to Canada, they were always automatically reported anyway if over $10k.


I don't think he has to report the transfers either. My comments were to highlight that the idea that Canadian citizenship provides some sort of protection
or that the IRS won't have info on the OP do not seem reasonable based on the web sites, info from the OP and google searches.





gt_23 said:


> Regarding an expansion of fatca-like legislation for Canadians, this is highly doubtful ...


I have no indication the Canadian gov't is planning anything similar to FATCA. 




gt_23 said:


> ...the cost/benefit does not justify it like it does for US citizen and Europeans.


Say what? You will have to explain this to me.

When I google search, I can find German, Swiss, Spanish and a host of other European countries who have told their US citizen customers to take their business 
elsewhere. The estimated cost of modifying their computer systems to the info the US wants versus the small number of customers and/or amount of US business makes cutting their US customers loose the cheaper choice. 

http://usatoday30.usatoday.com/mone...9/27/european-banks-oust-americans/57849014/1

From what I have read, the German banks doing so means they also don't have to sort out how to deal with violating Germain privacy laws by reporting info to the US gov't.



Canadian banks, on the other hand, lobbied the US for an exception. 

They clearly have too much US business and/or dual citizen clients to blow off FATCA as despite estimates of $100 to $200 million to update their computer systems, they have done it. They now have questions on their account forms and are passing to CRA the info who then passes off to the IRS.

http://www.cbc.ca/news/politics/fatca-tax-deal-with-u-s-takes-some-heat-off-canadian-banks-1.2524444



Given that the US thinks there's one million US citizens in Canada where only three hundred thousand self-report as US citizens, it makes sense to me that 
the IRS would take a closer look at their next door neighbour that has large US business interests that are easy to punish before spending a lot of effort on Europe.


Cheers


----------

