Canadian Dual Citizens or Residents of the United States and FATCA

Under the intergovernmental agreement, IGA, between the US and Canada, beginning in 2014, FATCA now applies to US Citizens, US Green Card Holders and US residents with bank accounts in Canada and financial investments wherein Canada’s financial institutions are compelled to perform a heightened level of due diligence designed to identify US taxpayers’ accounts. What are the Canadian financial institutions looking for with their newly implemented software, here are the criteria:

1. The name, address, and US taxpayer identification number of each account holder who is a US person which will surprise most individuals as:

1. Dual Citizens with Canadian and U.S citizenship;
2. S. Green Card holders;
3. The Estate of a deceased U.S. citizen; and
4. Canadian citizen with a joint account to a U.S. person as defined in the above (as defined in the a), b) or c).
5. Bank account number; and
6. Bank account balance or value as of the end of the reporting period (or the date an account was closed).

In less than 4 months the Canadian financial institutions will begin their electronic filing with the Canadian Revenue Agency, CRA, information returns for each US taxpayer’s account. Also this year the Canadian financial institutions will collect and report the location of the account, specifically:

1. Where the account is a custodial account, the total gross amount of interest, dividends, and other income generated with respect to the assets held in the account, that was paid or credited to the account during the reporting period;
2. Where the account is a depository account, the total gross amount of interest paid or credited to the account during the reporting period; and
3. where the account is not a custodial or a depository account, the total gross amount paid or credited to the account holder with respect to the account during the reporting period.

Beginning next year, for custodial accounts there will be reporting of the total gross proceeds from the sale or redemption of property paid or credited to the account during the reporting period where the Canadian financial institution acted as a custodian, broker, nominee, or otherwise as agent for the US person who is the account holder.

What does all this mean to you? You need to contact a competent legal advisor to assess your particular situation and begin planning how best to proceed on your reporting requirements for past and present compliance with the U.S. Treasury and, possibly, the U.S. Department of Justice, DOJ. We can help you with this dilemma and get your tax matters compliant with the U.S. Government.