The Foreign Account Tax Compliance Act (FATCA) is a U.S. tax legislation enacted in 2010, designed to target tax avoidance by U.S. persons using financial accounts with financial institutions outside of the U.S. FATCA requires financial institutions outside of the U.S. (like AGF or any other Canadian financial institution) to report information about the financial accounts held by: U.S. persons1 (individuals), specified U.S. persons (entities), passive non-financial foreign entities2 in which U.S. person(s) hold a substantial ownership interest, and non-participating financial institutions3 (collectively, ”FATCA reportable accounts”).
Effective July 1, 2014, Canada adopted these FATCA rules into the Canadian tax legislation which requires Canadian financial institutions to collect information from account holders and report information on the FATCA reportable accounts (as well as account holders that fail or refuse to certify their FATCA status) to the Canada Revenue Agency (CRA). The CRA may then provide this information to the Internal Revenue Service (IRS) in accordance with the provisions of the Canada-U.S. Tax Convention. AGF, its group of companies and the funds they manage are complying with the Canadian tax legislation that implements these rules.
Generally, subject to certain threshold exemptions, all non-registered (“cash”) accounts opened with a Canadian financial institution are subject to these rules. Registered accounts4 are exempted.
For accounts that are opened on or after July 1, 2014, Canadian financial institutions are required to collect information from the account holder to document and determine whether the account is a FATCA reportable account.
For accounts that were opened prior to July 1, 2014, Canadian financial institutions are required to review the accounts, collect information from the account holder, document and determine whether any of these accounts are FATCA reportable accounts.
Should the information that you provided or communicated to your registered dealer suggest that you may be a U.S. person, your registered dealer will contact you to obtain the necessary documentation or information in order to make a determination as to whether your account is a FATCA reportable account. If your registered dealer contacts you for additional FATCA documentation, please reply as soon as possible as your account may be reported to the CRA for FATCA purposes if your registered dealer is unable to gather the necessary information from you.
Should you have any questions about FATCA, please contact your tax advisor or visit the following websites:
1 Generally refers to U.S. tax residents and/or U.S. citizens, or U.S. organized entities (subject to certain exceptions).
2 Generally refers to an entity, organized outside of U.S., which generates more than 50% of its income from passive income such as interest, dividends, rent and royalties or holds assets, more than 50% of which generate passive income.
3 Generally refers to a financial institution outside of U.S. that does not register with the IRS or is in significant FATCA non-compliance.
4 Includes accounts such as: RRSP, RRIF, TFSA, RESP, RDSP, PRPP, RPP and DPSP.
The above contains general information only and AGF is not hereby rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This information is not a substitute for such professional advice or services, or should it be used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional advisor.
AGF shall not be responsible for any loss sustained by any person who relies on this information.