Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act ("FATCA") is tax legislation that was passed in the United States in 2010. FATCA is intended to prevent "U.S. persons" from evading U.S. tax using financial accounts held outside of the United States.
On February 5, 2014, the Canadian government announced that it had entered into an Intergovernmental Agreement (IGA) with the U.S. government under the existing Canada-U.S. Tax treaty, with further guidance expected from the government shortly. TD will provide further information on the IGA as it becomes available.
When does FATCA take effect?
FATCA implementation begins July 1, 2014.
Who is impacted by FATCA?
Non-U.S. ("foreign") financial Institutions will need to identify and report all “financial accounts” for specified U.S. persons and certain U.S. owners of non-U.S. entities. Financial accounts include bank, brokerage and other custodial accounts.
What is the definition of a U.S. person?
Under U.S. tax law, you are considered a U.S. person if you are:
- A citizen of the U.S. (including an individual born in the U.S., but resident in Canada or another country who has not renounced their U.S. citizenship.)
- A permanent resident of the U.S.
- A U.S. green card holder
You may also be considered a U.S. person if you spend considerable time in the U.S. in one year or over a period of years.
U.S. corporations, partnerships, estates and trusts are also U.S. persons.
Is every Financial Institution impacted by FATCA?
Every non-U.S. ("foreign") financial institution globally must comply with FATCA or potentially be subject to a 30% withholding tax on all U.S source income.
Will TD participate?
While considerable uncertainty still exists regarding the obligations that Canadian Banks will face under FATCA, TD will comply with all applicable laws and regulations in the jurisdictions where TD operates.
TD is committed to providing impacted customers with support and information to ensure they receive a comfortable experience once the law comes into effect.
Where do I go for more information?
For more information, please contact your tax advisor to better understand how FATCA impacts you or your business. Additionally, the Canadian Bankers' Association (CBA) website can provide you with background information on FATCA.
The above information is intended to provide general guidance only, and is not an exhaustive analysis of all provisions of FATCA. The above information should not be construed as legal or financial advice.