FATCA - US Citizens in Canada

FATCA Overview

FATCA stands for Foreign Account Tax Compliance Act. It is a US federal law enacted in 2010 to target non-compliance by US taxpayers using foreign accounts to hide their money to avoid US taxation. FATCA requires non-US financial institutions to report the accounts held by US persons to the US Internal Revenue Service (IRS).

FATCA became Canadian law on July 1, 2014. What this means is that relevant information on accounts held by US residents and US citizens are instead reported to the Canada Revenue Agency (CRA). The CRA then exchanges information with the IRS.

Am I affected by FATCA?

FATCA legislation affects those who are treated as a US person for US tax purposes. The FATCA legislation also affects certain types of businesses with US owners.

The term ‘US person’ includes the following (but is not limited to):

What types of accounts are reported?

Canadian financial institutions have to report most bank accounts, mutual funds, brokerage accounts, custodial accounts, annuity contracts and some life insurance policies. There are some exempt categories of accounts such as RRSPs, TFSAs, RESPs and RPPs. Your financial institution may not have to identify and report on certain accounts if their value is below a certain threshold amount.

Does my Canadian financial institution have to notify me about what is reported to the CRA?

Canadian financial institutions are obligated to be transparent about their procedures for complying with FATCA. They do not have to automatically notify account holders about reporting to the CRA, but they must make this information available to anyone who asks about them.

Which form do I have to provide this information?

The CRA has not issued a standard form for Canadian financial institutions to use for collecting the information from their account holders. Your financial institution might ask you to fill out a form for this purpose or it might have a comprehensive account opening form.

What about FBAR?

FBAR (Foreign Bank Account Reporting) requires US citizens holding more than USD $10,000 outside of the US to complete an FBAR form and send it to the US Treasury by June 30. It targets accounts that US citizens own, and accounts which US citizens have signing authority. This is separate from the tax return. The $10,000 limit applies to all of your accounts at any time during the year – so you will need to fill out the FBAR form if at any point during the tax year you had more than USD $10,000 in foreign bank accounts. Browse additional information for US citizens filing taxes in Canada.

Get the Help of a Cross Border Tax Specialist

Hall & Company is an accounting firm in Vancouver specializing in Canada US cross border tax. Our tax experts know the intricacies of tax law and can help you understand your tax obligations. We will support you to ensure your US tax return is filed properly and on time.

Contact us now and learn how we can help with your cross border tax needs.

Additional Resources

CRA FATCA: http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/menu-eng.html

IRS FATCA: https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca

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