Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Canada’

FATCA IGA USA-Canada signed ! (Mauritius, Italy and Hungary announced as well)

Posted by William Byrnes on February 6, 2014


An Intergovernmental Agreement (IGA) between the Government of Canada and the Government of the United States for the enhanced exchange of tax information under the Canada-United States Tax Convention was signed on February 5, 2014, in Ottawa.  See http://www.fin.gc.ca/treaties-conventions/notices/fatca-eng.asp  The IGA will enter into force once Canada has notified the United States that the procedures required by Canadian law for the bringing into force of the IGA have been completed. It is proposed that the IGA have effect as of July 1, 2014.

FATCA has raised a number of concerns in Canada—among both dual Canada-U.S. citizens and Canadian financial institutions. One key concern was that the reporting obligations in respect of accounts in Canada would compel Canadian financial institutions to report information on account holders who are U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) directly to the IRS, thus potentially violating Canadian privacy laws.  Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014.

Jean Richard, banking expert and contributing author for the Canadian compliance chapter to the LexisNexis® Guide to FATCA Compliance added:  “Canada’s Finance Minister Jim Flaherty stated that the lengthy negotiations resulted in obtaining significant exemptions and other relief.  Do these exemptions and relief, different from those found in the models IGA and other IGA signed, address the Canadian citizens concerns about the extratoriality affect of the US tax system?  According Canada National Revenue Minister, Kerry-Lynne D. Findlay,  

 “This is strictly a tax information-sharing agreement. This agreement will not impose any U.S. taxes or penalties on U.S. citizens or U.S. residents holding accounts in Canada.The CRA does not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose. This includes dual Canada-U.S. citizens. That will not change under this agreement.”

Jean Richard continued: “There is still much Canadian taxpayer concern about how this sensitive issue of risk of double jeopardy for Canadian Citizens who are also US Citizens or Green Card holders is to be dealt with.  Canada is a country that is said to have over one million Canadian citizen who happen to be  also a US Citizen, perhaps by birth or a parent. Canada and the US tax systems are not perfectly aligned, leading to the potential for double taxation.”  

“The double tax agreement has a US-centric feature known as a “savings clause” that subjects US persons to US tax regardless of the applicability of the treaty.  The inevitable result is an increase in the tax compliance and tax filing costs for Canadians that also have US nationality or a Green Card.   These additional costs must be addressed by the respective authorities and then solutions communicated to the general Canadian population.  These costs are in addition to those borne, estimated at about a billion Canadian dollars, by the Canadian financial industry to design and implement FATCA compliant reporting systems.”

Other IGAs including a new corresponding DTA announced by US Treasury 

“FATCA implementation is critical to combating international tax evasion and promoting transparency,” said Deputy Assistant Secretary for International Tax Affairs Robert B. Stack.  “The agreements announced today clearly demonstrate the considerable international support behind FATCA and we are proud to lead the global charge on this pressing issue.”  The U.S. Department of the Treasury recently announced that the United States has signed intergovernmental agreements (IGAs) with Hungary and Mauritius, the latter of which also signed a new tax information exchange agreement.  Treasury reports that the United States has signed 22 IGAs and has 12 agreements in substance to date.  

Joint Statements and Signed Bilateral Agreements

Canada IGA Quick Facts 

  • Under the agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) will be reported to the Canada Revenue Agency (CRA). The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. Tax Convention. This is consistent with Canada’s privacy laws.
  • The IRS will provide the CRA with enhanced and increased information on certain accounts of Canadian residents held at U.S. financial institutions.
  • Significant exemptions and relief have been obtained. For instance, certain accounts are exempt from FATCA and will not be reportable. These include Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, Tax-Free Savings Accounts, and others. In addition, smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt.
  • The 30 percent FATCA withholding tax will not apply to clients of Canadian financial institutions, and can apply to a Canadian financial institution only if the financial institution is in significant and long-term non-compliance with its obligations under the agreement.
  • The agreement is consistent with Canada’s support for recent G-8 and G-20 commitments intended to fight tax evasion globally and to improve tax fairness. In September 2013, G-20 Leaders committed to automatic exchange of tax information as the new global standard and endorsed a proposal by the Organisation for Economic Co-operation and Development to develop a global model for the automatic exchange of tax information. They also signaled an intention to begin exchanging information automatically on tax matters among G-20 members by the end of 2015.
  • Draft legislation to implement the agreement will be released for comment shortly on the Department of Finance website.

FATCA Compliance Program and Manual

book coverFifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.

The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA.  Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.

Posted in FATCA | Tagged: , , | Leave a Comment »

LexisNexis® Guide to FATCA Compliance

Posted by William Byrnes on March 1, 2013


The LexisNexis® Guide to FATCA Compliance was designed in consultation, via numerous interviews and meetings, with government officials, NGO staff, large financial institution compliance officers, investment fund compliance officers, and trust companies, from North and South America, Europe, South Africa, and Asia, and in consultation with contributors who are leading industry experts. The contributors hail from several countries and an offshore financial center and include attorneys, accountants, information technology engineers, and risk managers from large, medium and small firms and from large financial institutions. Thus, the challenges of the FATCA Compliance Officer are approached from several perspectives and contextual backgrounds.

This edition will provide the financial enterprise’s FATCA compliance officer the tools for developing a best practices compliance strategy, starting with determining what information is needed for planning the meetings with outside FATCA experts.

This 330 page Guide contains three chapters written specifically to guide a financial institution’s lead FATCA compliance officer in designing a plan of internal action within the enterprise and interaction with outside FATCA advisors with a view of best leveraging available resources and budget [see Chapters 2, 3, and 4].

This Guide includes a practical outline of the information that should be requested by, and provided to, FATCA advisors who will be working with the enterprise, and a guide to the work flow and decision processes.

Click here to pre-order the LexisNexis® Guide to FATCA Compliance!  Remember that only US customers can buy on the US Lexis store.

Chapter 1 Introduction
Chapter 2 Practical Considerations for Developing a FATCA Compliance Program
Chapter 3 FATCA Compliance and Integration of Information Technology
Chapter 4 Financial Institution Account Remediation
Chapter 5 FBAR & 8938 FATCA Reporting
Chapter 6 Determining U.S. Ownership Under FATCA
Chapter 7 Foreign Financial Institutions
Chapter 8 Non-Financial Foreign Entities
Chapter 9 FACTA and the Insurance Industry
Chapter 10 Withholding and Qualified Intermediary Reporting
Chapter 11 Withholding and FATCA
Chapter 12 ”Withholdable” Payments
Chapter 13 Determining and Documenting the Payee
Chapter 14 Framework of Intergovernmental Agreements
Chapter 15 Analysis of Current Intergovernmental Agreements
Chapter 16 UK-U.S. Intergovernmental Agreement and Its Implementation
Chapter 17 Mexico-U.S. Intergovernmental Agreement and Its Implementation
Chapter 18 Japan-U.S. Intergovernmental Agreement and Its Implementation
Chapter 19 Switzerland-U.S. Intergovernmental Agreement and Its Implementation
Chapter 20 Exchange of Tax Information and the Impact of FATCA for Germany
Chapter 21 Exchange of Tax Information and the Impact of FATCA for The Netherlands
Chapter 22 Exchange of Tax Information and the Impact of FATCA for Canada
Chapter 23 Exchange of Tax Information and the Impact of FATCA for The British
Virgin Islands
Chapter 24 European Union Cross Border Information Reporting
Chapter 25 The OECD, TRACE Program, FATCA and Beyond
Index

Posted in Compliance, information exchange, OECD, Reporting, Tax Policy, Taxation | Tagged: , , , , , , , | 1 Comment »

Republicans Balk at RIA User Fees

Posted by William Byrnes on July 25, 2011


Republicans on the House Financial Services subcommittee are retracting the issue of Registered Investment Advisor user fees, referencing the cost to small businesses. But the SEC maintains that it cannot conduct adequate RIA examinations without either charging user fees or delegating examination authority to an SRO that will charge user fees. The argument over user fees was prompted by the release, earlier this year, of the Dodd-Frank mandated SEC study on enhancing RIA examinations. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

Posted in Wealth Management | Tagged: , , , , , , , | Leave a Comment »

Advisors’ Stairsteps of Influence

Posted by William Byrnes on July 12, 2011


Advisors understand that referrals from existing clients are their best source for new business, but what else is working, and how effective are other methods being used by advisors to generate new business? A recently released survey provides us with a laundry list of approaches used by advisors to solicit new clients and gauges the productiveness of their marketing efforts.  The survey, which polled 262 financial advisors in November and December of 2010, found that client referrals are still the top way advisors generated new business. Behind client referrals, professional referrals were the second biggest producer.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

Posted in Wealth Management | Tagged: , , , , , , , | Leave a Comment »

Beware Private Placements: Lessons From MedCap, Provident and DBSI

Posted by William Byrnes on April 26, 2011


FINRA and the SEC are actively examining private placements and the firms that sell them. If the regulators believe that something is amiss, they won’t hesitate to impose severe fines on everyone involved in the sale.

FINRA has issued sanctions against two firms and seven individual principals of those firms.  FINRA accuses them of causing significant investor losses by failing to conduct a reasonable investigation before offering the private placements for sale to investors.

Read this two-page article by linking to AdvisorOne – a National Underwriters Summit Business open-access original content wealth management news portal.

Posted in Compliance, Wealth Management | Tagged: , , , , , , , | Leave a Comment »

 
%d bloggers like this: