Do I have to report a small foreign bank account?
Yes. The foreign asset schedule of the Indian return carries no value threshold, so one account is enough to require disclosure and a small balance is not a reason to leave it out. This is the most common omission on returns prepared by people used to another country's rules, because most foreign asset reporting elsewhere begins above a value and it is natural to reason by analogy. The schedule asks for the account, the institution, the period held and balance information, not for a judgement about whether the amount is material. An account opened while you were abroad and never closed belongs on the schedule for every year you are resident.
Do I report shares given by a foreign employer?
Usually yes, and it is the omission that most often comes to light later. Equity held through an employer plan abroad is a foreign asset like any other. Shares vested from a restricted stock award, shares bought under an employee purchase plan, and units still sitting in a plan account all belong on the schedule. Unvested awards and unexercised options have to be looked at on their own terms rather than assumed in or out. The information comes from the plan administrator's statements rather than from your payslip, and those statements are produced on the plan's own calendar, which is not the period the schedule asks about.
Which period does Schedule FA actually cover?
Not the Indian tax year, which is the trap. The schedule asks about a calendar period, so a straightforward download of statements for the tax year gives the wrong window and the wrong balances. The practical consequence is that every bank, broker and plan statement has to be cut to the calendar period before anything is entered, and the balance information reported has to be read off that window rather than at the year end you are used to. Where an account was opened or closed part way through, the dates recorded have to sit inside the same window. Getting this right once makes each later year mechanical.
Does Schedule FA apply the year I move back to India?
Settle your residence class for that year first, because the requirement attaches to a resident and the classes are not all treated alike. Indian residence turns on day counts and on the pattern of earlier years, and somebody returning after a long period abroad may fall into an intermediate class for the first years back. Whether the schedule is required at all can turn on that. The exchange control regime then asks a different question with its own definition of residence, so satisfying one is not satisfying the other, and a bank may hold a transfer until both are answered. The order of work is residence class, then reporting, then remittance.
What if the foreign account earns no income?
It is still reportable. The disclosure duty is separate from taxability, so a dormant account, a property producing nothing and a fund that distributes nothing all belong on the schedule. The reason to take this seriously is that the consequence of leaving an asset off is not measured by the tax on that asset, so a nil-income account can generate a problem that a taxable one, properly disclosed, would not. It also means the answer to whether something goes on the schedule can never be derived from your income computation. The two are built from different sources, and the schedule has to be built from asset records.
What happens if I left an account off an earlier return?
The position is common, and the order of work matters more than speed. First build the complete asset picture for each affected year from the underlying records, because a correction that is itself incomplete is worse than the original omission. Then establish which correction route is available for each of those years, since that depends on the year and on what was originally filed. Then decide what is filed, with a written chronology of what was held and when, so a later query can be answered from the file rather than from memory. Taking the years in order, oldest first, keeps the disclosure coherent.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
Do Canada and the United States share tax information?
Yes, through more than one channel. The treaty has an exchange-of-information article that supports both routine and on-request exchange. Separately, an intergovernmental agreement has Canadian financial institutions identify US-reportable accounts and report them to the CRA, which passes them to the IRS, with the reverse flow for Canadian residents. Most other country pairs use the Common Reporting Standard for the same purpose. See FATCA reporting.
