The Future of FATCA in Canada: Pros and Cons of the IGA
The U.S. Foreign Account Tax Compliance Act, more commonly known as FATCA, was passed in 2010. FATCA requires foreign financial institutions (“FI”s) to report on the account information of U.S. citizens and residents (including dual citizens) to the IRS starting in July 2014. Although the requirement to report directly to the IRS violated Canadian privacy laws, there were withholding tax consequences for non-compliance with FATCA. The uproar in Canada over the privacy issue and the financial costs of implementing FATCA led to the signing of an intergovernmental agreement [“IGA”] between Canada and the U.S. on February 5, 2014. […]
