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FATCA Intergovernmental Agreement with Canada Is in the Works

Download this publication November 9, 2012

The Canadian Department of Finance announced on November 8th that negotiations are being held between Canada and the United States on an agreement to improve cross-border tax compliance through enhanced information exchange under the Canada-United States Tax Convention. The changes would support the provisions of the United States Foreign Account Tax Compliance Act (FATCA). The existence of the talks is also confirmed by an announcement released by the U.S. Treasury Department on the same date, which includes Canada among a list of jurisdictions with which Treasury is actively engaged in a dialogue towards concluding an intergovernmental agreement.

The announcement is welcome news to Canadian financial institutions and investment funds. They have been waiting to see whether they will be required to enter into individual agreements with the U.S. Internal Revenue Service to avoid becoming subject to the onerous new withholding taxes FATCA will impose on non-participating financial institutions. Such agreements should not be necessary if the two governments enter into a direct agreement.

The announcement does not include any details, such as whether any relief is being discussed for the hundreds of thousands of U.S. citizens resident in Canada who have not been complying with their U.S. tax obligations.

Davies Ward Phillips & Vineberg LLP is an integrated firm of more than 240 lawyers with offices in Toronto, Montréal and New York. The firm is focused on business law and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its clients, regardless of borders.

The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.

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