Canadian Fund Institute Commends Gov't For FATCA Exemptions

By Editorial 11 February, 2014

The Investment Funds Institute of Canada (IFIC) released a statement on February 5, 2014 commending the federal government for the exemptions and relief it has secured on behalf of Canadian investors through the Intergovernmental Agreement (IGA) that it has negotiated with the United States government to implement the Foreign Account Tax Compliance Act (FATCA).

Under the IGA, registered plans, including Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Education Savings Plans, Registered Disability Savings Plans and Tax-Free Savings Accounts, are exempted from FATCA and will not be reportable. This will benefit the millions of Canadians who hold mutual funds in these types of plans.

The agreement safeguards Canadian investors by ensuring that Canadian financial institutions will not be required to close client accounts or send any reporting directly to the IRS.

"On behalf of Canadian investors, we want to recognize the government for its dedication in working to reduce the impact of FATCA on Canadian investors," stated Joanne De Laurentiis, IFIC's president and CEO. "The mutual funds industry is committed to a strong, stable investment sector where investors can realize their financial goals. The exemptions and relief secured by the Canadian government under the IGA will provide welcome relief to Canadian investors who may be subject to US tax rules as they save for retirement and other important life events."

While the release of the IGA represents a major step, details of how financial institutions will be required to implement the IGA will be contained in implementing legislation. The IFIC said it will be reviewing the legislation and guidelines when they are released.

FATCA, enacted by the US Congress in 2010 and taking effect on July 1, 2014, is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30 percent tax on payments of US-sourced income.

Tags: Foreign Account Tax Compliance Act (FATCA) | Tax | Investment | FATCA | Retirement | Legislation | Canada | United States | Compliance | Education | Expats | Investment | Retire | Invest | Education | Investment | Retirement | Tax |


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