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Whether you’re receiving a large money transfer from abroad or bringing a large amount into Canada yourself, there are laws in place that must be followed to protect both your money and the interests of the government, and large remittances may be subject to taxes.
Keep reading to find out more about the rules and regulations that apply to such transactions, so you can protect yourself and move your funds into Canada safely.
Canadian authorities do not regulate or tax most gifts of cash sent into the country. In short, residents can receive as much cash as they’d like without triggering a gift or capital gains tax. Because of this, you shouldn’t have to deal with cumbersome legal documents after accepting your remittance.
Exceptions come into play when that cash is in the form of property, company shares, designated stock or other securities. In that case, your funds may be subject to 50% capital gains tax, depending on the circumstances of your transfer. There is no legal limit to the amount that can be transferred into Canada – but your money transfer provider or bank may impose its own maximums. For large transfers, encourage your sender to use a provider with no transfer limit like OFX or Global Reach.
Is there a legal maximum to the amount that can be transferred to Canada?
There is no legal limit to the amount that can be transferred into Canada – but your money transfer provider or bank may impose its own maximums. For large transfers, encourage your sender to use a provider with no transfer limit like OFX or Global Reach.
If you go through a legitimate money transfer provider, you won’t need to provide any extra paperwork. The main legal considerations when sending large sums of money are the Anti-Money Laundering (AML) laws, but your money transfer provider will look after the necessary documents when you submit your identification for processing. As a good rule of thumb, keep all records and emails relating to the transfer in case you need them later.
If you’re travelling into Canada with CAD$10,000 or more, you’ll need to declare this using Form E311, a CBSA declaration card, an Automated Border Clearance kiosk or a Primary inspection kiosk. Alternatively, you can make a verbal declaration to a border services officer upon your arrival.
Splitting transactions into smaller amounts is referred to as “structuring,” and is considered a punishable offense when used to avoid the $10,000 reporting threshold. Structuring is something money launderers do to avoid detection, but banks and money transfer services are trained to detect this and report it to FINTRAC.
If you don’t list the transfer on your income taxes, you could be charged with tax evasion in Canada. If you can prove that the failure to list the transfer was accidental, you’ll only have to pay any taxes owing plus a penalty. If the failure to file was intentional, you could be criminally charged.
Any transfer over $10,000 CAD needs to be reported to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), but that responsibility generally falls on banks and money transfer companies. Financial institutions may also report any transactions deemed suspicious, regardless of the amount being received.
If you follow the law and submit any required legal documentation timely and accurately, you shouldn’t experience hassles with the CRA.
Although many types of transfers don’t count as taxable income, some transfers might – for example, if you’re receiving money related to income-producing activities outside of Canada. If you don’t report taxable income, you may be on the hook for stiff penalties including a percentage of the income you failed to report (possibly around 5-10% of that income) plus an additional percentage for every month you avoided paying taxes (possibly around 1-2% of that income). Speak with a Canadian tax professional to find out exactly what tax rules apply to you.
Depending on the provider, options for receiving money include bank-to-bank transfers, cash pickups and deposits to mobile wallets.
To pick up your transfer in person, you may need to provide photo ID or a confirmation number to receive your funds. If you own an account with a Canadian bank or money transfer company, you may not be required to provide this information every time you receive money.
See how lower fees, stronger exchange rates and higher transfer limits can help you get more money to Canada.
The absence of a gift tax in Canada makes it easy for Canadians to receive money transfers from acquaintances or loved ones. While you won’t have to worry about any forms, transfers over $10,000 CAD may end up being reported to FINTRAC by the company processing the transfer.
As with all international money transfers, be wary of potential fraud and only receive money from people you know for verifiable reasons. Using a reputable provider can safeguard you from potential scams.
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