Part XIX of the Income Tax Act is Canada’s implementation of the Common Reporting Standard. It requires Canadian financial institutions to identify accounts held by tax residents of other countries and report those accounts each year to the Canada Revenue Agency, which then shares the data with participating foreign tax authorities. As of January 2026, roughly 78 jurisdictions take part in this automatic exchange. If you hold a Canadian financial account and are a tax resident somewhere other than Canada or the United States, your account information is reported to your home tax authority.
Which Institutions Have to Report
Part XIX applies to “reporting financial institutions.” Four categories of Canadian entities fall in:
- Depository institutions, such as banks and credit unions that accept deposits in the ordinary course of business.
- Custodial institutions that hold financial assets for others as a substantial portion of their business, including brokerages and portfolio custodians.
- Investment entities, including businesses that trade in financial instruments or manage assets for customers, certain investment funds, and wealth management firms.
- Specified insurance companies that issue or make payments under cash value insurance contracts or annuity contracts.
Some entities are carved out as non-reporting financial institutions because they carry a low risk of being used for tax evasion. The CRA guidance lists governmental entities and international organizations, broad participation retirement funds, narrow participation retirement funds, qualified credit-card issuers, and prescribed non-reporting financial institutions designated through Canadian tax regulations.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act
Which Accounts Are Reportable
An account is reportable when it is held by one or more “reportable persons,” or by a passive non-financial entity with one or more controlling persons who are reportable. A reportable person is an individual or entity that is tax-resident somewhere other than Canada or the United States, excluding low-risk categories like publicly traded corporations, governmental entities, central banks, and financial institutions.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act Once an account is identified as reportable, it stays reportable that year and every subsequent year unless the account holder ceases to be a reportable person.
Certain accounts are classified as “excluded accounts” even at a reporting institution. Escrow accounts tied to a court order or a real property transaction qualify. So do retirement and pension accounts that meet the CRS criteria. Dormant accounts are excluded only if three conditions are all met at once: the account holder has not initiated a transaction in the previous three years, has not communicated with the institution in the previous six years, and the balance does not exceed $1,000 USD.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act A dormant account with a $5,000 balance still gets reported.
What Account Holders Must Provide
Determining tax residency is the account holder’s responsibility. The institution then verifies that the answer is reasonable given what it already knows about the customer. Two CRA forms drive the process: Form RC518 for individuals and Form RC519 for entities.2Canada.ca. RC518 Declaration of Tax Residence for Individuals3Canada.ca. RC519 Declaration of Tax Residence for Entities – Part XVIII and Part XIX of the Income Tax Act Institutions may substitute their own forms if they capture the same required data. A valid self-certification must be signed or otherwise affirmed, dated, and include:
- Full legal name
- Residence address
- Every jurisdiction where the account holder is tax-resident
- Tax identification number for each reportable jurisdiction
- Date of birth (for individuals)
Refusing to sign does not remove the account from the system. For a new account, if the holder does not provide a self-certification, the institution must treat the holder as resident in every reportable jurisdiction for which an indicator exists and report accordingly. For pre-existing accounts, a holder who fails to provide a foreign tax identification number on request may be charged a $500 penalty per failure under subsection 281(3), unless they apply for the number within 90 days and supply it within 15 days of receiving it.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act
Due Diligence by Account Type
The rules split by two questions: when the account was opened, and whether the holder is an individual or an entity. Part XIX took effect on July 1, 2017. Accounts opened before that date are “pre-existing”; accounts opened on or after are “new.”
Pre-Existing Individual Accounts
These divide into lower value (balance of $1,000,000 USD or less as of June 30, 2017) and high value (above that threshold). Lower value accounts require an electronic search of the institution’s records for indicators of foreign residency, including a foreign mailing or residence address, foreign telephone numbers with no Canadian number on file, standing instructions to transfer funds abroad, and a power of attorney granted to someone with a foreign address.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act High value accounts require the same electronic search plus a paper record review and an inquiry to the relationship manager.
Pre-Existing Entity Accounts
Entity accounts with an aggregate balance of $250,000 USD or less on June 30, 2017 need not be reviewed, identified, or reported until the balance exceeds $250,000 USD on the last day of a later calendar year.4Justice Laws Website. Income Tax Act – Section 275 An institution can elect to skip the threshold and review all entity accounts, either across the board or for a defined group. Once the threshold is crossed, the institution must determine whether the entity is itself a reportable person and, if it is a passive non-financial entity, whether any of its controlling persons are reportable.
New Accounts
New accounts are simpler in concept and more demanding at onboarding. Every new account holder must supply a self-certification of tax residency when the account is opened, regardless of balance. The institution must confirm that the certification is reasonable given other information collected during onboarding, including anti-money-laundering documentation.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act A self-certification claiming Canadian residency alongside a foreign passport needs to be resolved before it can be accepted.
Controlling Persons of Passive Entities
When an entity holder is a passive non-financial entity (broadly, an entity that isn’t a financial institution and isn’t an “active” business), the institution must look through to the natural persons who ultimately control it and determine whether any of them are tax-resident in a reportable jurisdiction. For a corporation, a controlling person is usually anyone holding a controlling ownership interest, typically 25% or more of shares or voting rights; where no such person exists, senior managing officials count. For a trust, controlling persons include the settlor, the trustees, any protector, the beneficiaries or class of beneficiaries, and anyone else exercising ultimate effective control.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act A single reportable controlling person is enough to make the entity’s account reportable, with that individual’s information attached.
How Part XIX Relates to Part XVIII (FATCA)
U.S. account holders are not captured by Part XIX because they are already covered by Part XVIII, which implements Canada’s intergovernmental agreement under FATCA. The two regimes run in parallel, and Canadian financial institutions must comply with both. Classifications don’t always line up. Charities and non-profits that are non-reporting financial institutions under Part XVIII may still be reporting financial institutions under Part XIX. A U.S. entity that is a passive non-financial entity with controlling persons resident in a reportable jurisdiction triggers reporting under both parts.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act A FATCA compliance program does not automatically cover Part XIX obligations.
Filing the Information Return
Every reporting financial institution that maintains a reportable account at any time during a calendar year must file a Part XIX information return electronically before May 2 of the following year.5Government of Canada. Explanatory Notes Relating to the Income Tax Act – Common Reporting Standard Filing goes through the CRA’s Web Forms application or by Internet file transfer in XML format, and institutions typically need access to My Business Account or Represent a Client, and possibly a web access code.6Canada.ca. How to Complete and File a Part XIX Information Return
The return reports, for each reportable account, the holder’s name, address, jurisdiction of tax residence, tax identification number, date of birth (for individuals), the account number, and the account balance or value at the end of the calendar year. The CRA runs automated validation after filing and notifies the institution of any errors.7Canada.ca. After You File a Part XVIII or Part XIX Information Return
Penalties for Non-Compliance
The general penalty for failing to file an information return or failing to comply with a due diligence obligation sits in subsection 162(7): the greater of $100 or $25 per day, up to a 100-day cap, for a range of $100 to $2,500. For late-filed prescribed information returns, subsection 162(7.01) applies a sliding scale by volume, with daily rates from $10 (fewer than 51 returns) up to $75 (more than 10,000 returns), also capped at 100 days.8Justice Laws Website. Income Tax Act – Section 162 The CRA guidance signals more serious consequences for repeated failures, intentional misreporting, deliberate omission, or actively helping account holders evade their reporting obligations.1Canada.ca. Guidance on the Common Reporting Standard – Part XIX of the Income Tax Act
Record-Keeping and Anti-Avoidance
Self-certifications must be kept for six years after the related account is closed. Other Part XIX records must be kept for six years from the end of the last calendar year in which the record was relevant. Electronic records must stay in an electronically readable format for the full retention period.5Government of Canada. Explanatory Notes Relating to the Income Tax Act – Common Reporting Standard
Section 280 contains an anti-avoidance rule. If a person enters into an arrangement or engages in a practice whose primary purpose is to avoid a Part XIX obligation, the CRA treats the person as though the arrangement never existed.5Government of Canada. Explanatory Notes Relating to the Income Tax Act – Common Reporting Standard Restructuring accounts or routing them through intermediary entities to dodge reporting does not work; the obligation attaches anyway.