Cross-border USD business account: a Vancouver primer

What to take away

What a USD account does and does not solve for a BC exporter

A USD account lets a British Columbia company hold, receive and pay out US dollars without converting on every transaction. That is the whole benefit. It does not make you a US taxpayer, it does not give you a US bank relationship, and it does not stop the bank from earning a margin when you move money between currencies.

For a Vancouver freelancer invoicing a Seattle client, the practical gain is timing. You invoice in USD, the client pays in USD, and the money sits in USD until you decide to convert. If the loonie weakens against the dollar, you convert later and keep more. If it strengthens, you wait or convert anyway.

What it does not solve is the spread. A Canadian USD account is still a Canadian account at a Canadian institution, so any conversion to or from CAD runs through that institution's rate. The account is a container, not a hedge.

Vancouver's economy leans on the Pacific gateway: tech, film, professional services and trade all bill south of the border. That density means USD accounts are routine at the big banks — RBC, TD, CIBC, Scotiabank and BMO all offer them — and at BC credit unions such as Vancity. Each institution sets its own monthly fee, minimum balance and conversion spread, so the schedule you request in writing is what your actual cost turns on.

If you are not a Canadian resident and you are trying to open an account here, the process differs from the domestic one. The steps for a business bank account non resident sit in a separate guide.

Exchange-rate spreads and when they are charged

The exchange-rate spread is the gap between the mid-market rate and the rate your bank or platform gives you. It is charged every time currency changes hands, whether you notice it or not. On a USD 20,000 invoice, a two per cent spread is USD 400 gone before any wire fee.

Banks quote a single rate, not a spread, so the cost is invisible unless you compare it to a reference. The Bank of Canada publishes daily exchange rates and financial statistics that give you that reference point, and its currency functions explain how the central bank interacts with the foreign exchange market.

Spreads are charged at three moments: when a US payment arrives and is auto-converted, when you move money from your USD account to your CAD account, and when you pay a US supplier from a CAD balance. The first is the one that catches people, because some accounts convert by default when the money lands.

Ask your institution whether incoming USD is held as USD or converted automatically. If it converts, you are paying the bank's margin on money you never intended to exchange, and you cannot undo it.

Dedicated transfer services such as Wise, OFX and Payoneer often beat bank rates on larger amounts, but they add a counterparty and a settlement delay. Whichever route you choose changes both the cost and the timing, so compare them stage by stage rather than on the advertised rate alone.

Receiving US payments: wires, ACH and card settlement

US clients pay in three main ways, and each lands differently in a Canadian USD account. The method your client prefers often decides your fee structure more than your bank choice does.

A US wire to a Canadian account works, but the sending bank needs your institution's SWIFT code and your account details in the format your bank publishes. Errors cause returns, and returns cost money on both sides.

ACH is the US retail clearing system. It is cheaper than a wire but it needs a US receiving point, which is why some Vancouver businesses use a US-domiciled account or a payment provider as the entry point. Do not confuse ACH with Canada's EFT system: they are separate networks with separate rules.

Card settlement suits smaller recurring invoices. The trade-off is the processor's percentage, which is usually higher than a wire fee on anything above a few thousand dollars, plus the risk of a chargeback months later.

If you collect the same client every month, a pre-authorized debit arrangement can work, but the rules differ by country. Canada's pre-authorized debit rules cover CAD debits from Canadian accounts, not US ones, so a US client's recurring payment usually runs through ACH instead.

Reporting obligations when US income lands in a Canadian account

If you are resident in Canada, your worldwide income is reportable, including US dollars sitting in a USD account in Vancouver. The account's currency does not change the obligation. What changes is the conversion you use to report it.

The CRA expects foreign income converted to Canadian dollars at a reasonable rate, generally the Bank of Canada rate for the day the income was received or an average for the period. The Bank of Canada's published rates and statistics are the standard reference for this.

Keep the rate you used with the invoice and the bank record.

If you hold a US-domiciled account or other specified foreign property, the CRA may require form T1135 with your return. The test is the total cost amount of those holdings — what you paid for them, not what they are worth now — and the CRA publishes the threshold that applies along with the instructions for the form. A USD account held at a Canadian institution is not specified foreign property, so it does not trigger that form on its own.

GST/HST is the second question. Most services supplied to a US client are zero-rated when the client is outside Canada and the service is not consumed here, but the analysis depends on the service and the place of consumption. Registration becomes mandatory once you are no longer a small supplier under the GST/HST rules, and the CRA publishes the revenue threshold that applies. A business number comes first.

If you operate through a corporation, the income lands in the company, not on your personal return, and the corporate filing rules apply. Dividends or salary you take out are a second taxable event.

US withholding tax can apply to some payments, and a treaty may reduce it. US clients often ask for a W-8BEN-E to confirm your Canadian status, so the treaty rate applies instead of the default withholding. That is a question for an accountant who works with cross-border clients, not something to guess at.

Privacy is the other obligation. If you hold client data across borders, the Office of the Privacy Commissioner's guidance for businesses sets out what you must tell clients about where their information goes and who can access it.

Choosing between a Canadian USD account and a US-domiciled account

A Canadian USD account is a Canadian deposit account denominated in US dollars. If it is at a federal bank, it sits under the Bank Act and is covered by CDIC deposit insurance, subject to the usual eligibility rules per depositor per institution. If it is at a BC credit union, the BC Financial Services Authority is the regulator and the Credit Union Deposit Insurance Corporation of British Columbia provides the deposit protection instead of CDIC.

A US-domiciled account sits at a US institution or a US branch of a foreign bank. It can receive ACH directly, which removes a layer of friction for US clients. It may also bring US reporting questions, depending on your citizenship, residency and the entity that holds the account.

For most Vancouver freelancers and small companies, the Canadian USD account is the simpler starting point. The paperwork is domestic, the deposit insurance is familiar, and the CRA reporting is the same either way.

A US-domiciled account makes sense when US clients insist on ACH, when you hold significant USD balances, or when you need a US payment address for a platform. It rarely makes sense purely to save on conversion, because the spread still applies when the money comes back.

The two are not mutually exclusive. Some BC companies run a Canadian USD account for operations and a US account for collections, then move funds between them. That adds a reconciliation step and another set of fees.

If you are setting up from outside Canada, the non resident business bank account route has different documentation and sometimes different fee schedules.

Documents a Vancouver business needs at opening

The FCAC sets out the steps for opening a bank account in Canada, and the same identity requirements apply to a USD account. Expect the process to take longer than a personal account, especially for a corporation.

That is the checklist — work through it before you go in. The two items people skip are the written fee schedule and the conversion setting, and both cost money later.

A USD account is one piece of the money flow, not the whole system. If you want the account to hold funds only briefly before they move on, a payment account may fit better than a full deposit account.

For companies weighing how money crosses borders and what each route costs, the money transfers overview sets out the options.

Common questions