Electronic Funds Transfer Reporting

What is Electronic Funds Transfer Reporting?

International tax evasion and aggressive tax avoidance are costly to taxpayers worldwide, and are unfair to businesses and individuals who follow the rules. The Government is committed to growing Canada’s tax base by searching out tax cheats, while simultaneously lowering the tax burden for businesses and families.

Economic Action Plan 2013 introduced important new measures to combat international tax evasion and aggressive tax avoidance. These measures included the requirement for financial institutions to report international electronic funds transfers (EFTs) of $10,000 or more to the Canada Revenue Agency (CRA) beginning in January 2015. This information helps the CRA to identify taxpayers who may be participating in aggressive tax avoidance or who may be attempting to conceal income and assets offshore.

This new requirement to report to the CRA applies to the same financial intermediaries that are already reporting information on international EFTs to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). That means no added administrative burden or red tape.

What is considered an international electronic funds transfer?

An international electronic funds transfer means the transmission of instructions for the transfer of funds, other than the transfer of funds within Canada. This transmission can be done through any electronic, magnetic or optical device, telephone instrument or computer. In the case of Society for Worldwide Interbank Financial Telecommunication messages, only SWIFT MT 103 messages are included.

Reporting entities must report only EFTs of $10,000 or more. They must also report two or more EFTs of less than $10,000 each that are made within 24 consecutive hours by or on behalf of the same individual or entity when they total $10,000 or more, as these are considered to be a single transaction.

Which financial intermediaries are required to report electronic funds transfers to the CRA?

Financial intermediaries that must report are defined as “reporting entities” in the Income Tax Act (ITA). They include banks, credit unions, caisses populaires, trust and loan companies, money service businesses and casinos.
To find out more about who should report an electronic funds transfer to the CRA, go to Part XV.1 – Reporting of electronic funds transfer.

How to report electronic funds transfers

To ensure the new requirement imposes no added burden or red tape, reporting entities will submit EFTs electronically to both FINTRAC and the CRA simultaneously. This will happen simultaneously through a shared component of the existing FINTRAC reporting system. This consists of the F2R and batch reporting systems. The EFT reporting requirements for the CRA and FINTRAC are identical. Reporting entities must file EFTs no later than five working days after the day the transfer occurred.

For more information on how to submit EFTs to the CRA through the shared reporting process, go to Reporting to FINTRAC on the FINTRAC website. FINTRAC will continue to manage the existing reporting channels and provide user support to reporting entities. Reporting entities will continue to enroll only with FINTRAC.

If you have any questions related to EFT reporting requirements, call the CRA at 1-800-959-5525.

Paper reporting

If you can’t report EFTs electronically, you must report using the CRA’s Form RC438, International Electronic Funds Transfer Report. If you are submitting a paper form, you must send it separately to both FINTRAC and the CRA.