U.S. and Canada Reach FATCA Agreement

The U.S. and Canada have reached a tax information sharing agreement in regards to FATCA while allowing for significant exemptions.
By Jake Safane(2147484770)
The U.S. and Canada have reached a tax information sharing agreement in regards to FATCA while allowing for significant exemptions.

As a protection of Canada’s privacy laws, particularly for dual citizens of the two countries, the agreement allows for financial institutions in Canada to report relevant information on accounts held by U.S. residents and U.S. citizens to the Canada Revenue Agency (CRA), rather than the IRS. The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. Tax Convention. In return, the IRS will also provide the CRA with information on certain accounts of Canadian residents held within the U.S.

The agreement also applies to the 30% FATCA withholding tax for non-compliance; this will not apply to clients of Canadian financial institutions and will only apply to a Canadian financial institution “if the financial institution is in significant and long-term non-compliance with its obligations under the agreement,” said a statement from Canada’s Department of Finance.

In addition, certain types of accounts will be exempt from FATCA including Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, Tax-Free Savings Accounts, and others. In addition, smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt from the law.

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