Agreement and FATCA Overview
FATCA
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is U.S. tax legislation enacted in 2010 to provide the Internal Revenue Service (IRS)
increased ability to detect tax evasion by U.S. persons through the use of financial accounts at
foreign (i.e., non-U.S.) financial institutions (FIs).
The U.S. has negotiated and is negotiating agreements with countries across the globe
to facilitate the exchange of tax related information. The "Agreement"
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with Canada was
signed on February 5, 2014 and Canadian FIs are required to comply under Canadian federal
legislation. Canadian FIs are required to identify and document account holders of financial
accounts covered by the Agreement and report certain information about financial accounts
held by a U.S. Person to the Canada Revenue Agency (CRA). Under the Agreement, the CRA is
required to provide to the IRS, on an automatic basis, information on financial accounts held
by U.S. Persons.
Questions and Answers
What does this mean to individuals and entities?
For financial accounts or products covered by the Agreement opened or purchased after June
30, 2014, FIs are required by Canadian law to determine if the financial account is reportable
to the CRA. Individuals opening new financial accounts may be asked to certify whether or
not they are a U.S. Person. Clients with U.S. indicia may be required to provide additional
documentation verifying their non-U.S. Person status.
In addition, FIs are required to review certain financial accounts and products covered by the
Agreement in existence on June 30, 2014 (pre-existing accounts) for U.S. indicia and obtain
additional information or documentation to validate whether or not account holders with U.S.
indicia are U.S. Persons. Clients may be contacted to provide more information with respect
to this review.
If you are a U.S. Person, you will be asked to provide your U.S. Taxpayer Identification Number
(TIN). For additional information about TINs, see the IRS website HERE.
If you do not provide required documentation in a timely manner, your FI is required to report
information about the account to the CRA even if you are not a U.S. Person.
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Foreign Account Tax Compliance Act.
The full name of the Agreement is "Agreement Between the Government of the United States of America
and the Government of Canada to Improve International Tax Compliance through Enhanced Exchange of
Information under the Convention Between the United States of America and Canada with Respect to Taxes
on Income and on Capital".
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