Bulletin

Canada and U.S. Enter into FATCA Intergovernmental Agreement

Authors: R. Ian Crosbie, Nathan Boidman, Michael N. Kandev, Peter Glicklich, Abraham Leitner and Raj Juneja

The U.S. Treasury Department and the Canadian government both announced today that Canada and the United States have signed an intergovernmental agreement (IGA) to implement the provisions of FATCA. The agreement is a “Model I” agreement, which provides for direct information exchange between the U.S. and Canada, with each government collecting from its local financial institutions the relevant information on account holders who are taxpayers of the other country. It had been reported that Canada was seeking to limit its disclosure obligations to account holders who are U.S. residents, but unfortunately the IGA does impose reporting on Canada with respect to U.S. citizens resident in Canada. The main beneficiaries of the IGA are Canadian financial institutions (FFIs) who will be spared the need to enter into individual FATCA FFI Agreements with the IRS. Canadian FFIs still need to register through the IRS web portal for FATCA to obtain a global intermediary identification number (GIIN) to avoid the withholding rules on U.S. source payments that go into effect on July 1st of this year. The necessary Canadian statutory provisions to give effect to the agreement have been released in draft form.

Related

IRS Releases Final Regulations on Deductibility of Business Interest Expense

Aug. 05, 2020 - The IRS recently released long-awaited final regulations (Final Regulations) on the limitation on the deductibility of interest expenses under section 163(j), along with new proposed regulations (New Proposed Regulations) that address a variety of highly technical issues that are not covered by...

IRS Finalizes High-Tax Exception to GILTI

July 22, 2020 - The U.S. Treasury Department and the IRS have released final regulations (2020 Final Regulations) allowing certain domestic shareholders of a “controlled foreign corporation” (CFC) to elect under a high-tax exception to opt out of the tax imposed on the CFC’s “global intangible low-taxed...