How will FATCA apply to Canada?
On February 5, 2014, Canada’s Department of Finance announced that an Inter-Governmental Agreement (IGA) has been signed between Canada and the United States to improve international tax compliance and to fully implement FATCA across the country. This means that foreign financial institutions in Canada will be required to report financial accounts of U.S. tax payers directly to the IRS.
In countries without an Inter-Governmental Agreement with the United States, foreign financial institutions will still be required to report directly to the IRS. Generally, a 30% withholding tax will be deducted from U.S. source payments received by foreign financial institutions that are in countries without an IGA.
What does it mean for affected individuals?
The IRS will have foreign financial account information of individuals with ties to the United States. It is important that if you have a filing obligation, that the information you provide is complete and correct as the IRS will have access to your information submitted by the foreign financial institutions.
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