What is FATCA?
In March 2010, the Foreign Account Tax Compliance Act (FATCA) was signed into U.S. law. The purpose of the Act is to identify people who may evade US taxes by holding accounts outside of the United States. On February 5, 2014, the Canadian government announced that it had entered into an Intergovernmental Agreement (IGA) with the U.S. government under the existing Canada-U.S. Tax treaty. This agreement clarified that all reportable information under FATCA regulations will be reported directly to the Canada Revenue Agency (CRA). The CRA will then exchange this information with the IRS through existing provisions and safeguards of the Canada-U.S. Tax Convention. This complies with Canada’s privacy laws.
What are “reportable accounts”?
“Reportable accounts” are personal and non-personal accounts held by:
- one or more U.S. persons; or
- certain entities in which one or more U.S. persons hold a substantial ownership or controlling interest; or
- U.S. Corporations.
Many additional limitations apply, further reducing the number of accounts that will qualify as “reportable.” We expect that FATCA will not have any impact on most of our Members. All obligations will be set by Canadian Law, not U.S. Law, in an effort to minimize impact to our Members.
In cases where a Member may be impacted, Meridian will assist the Member to ensure that their situation is handled appropriately.
Note: If you want help in determining if you are a U.S. person or how FATCA will affect your accounts, we recommend that you speak with a professional tax advisor.
What is a “U.S. person”?
If you want help in determining if you are a U.S. person for the purposes of FATCA, we suggest that you speak with a professional tax advisor. In general, attributes that generally cause an individual or business to be classified as a U.S. person include:
- U.S. citizenship; (anyone born in the U.S. and who has not renounced their U.S. Citizenship)
- being a lawful resident of the U.S. (permanent resident); and/or
- U.S. corporation, estate, or trust.
Will FATCA have an impact on my accounts?
That will depend on whether or not your accounts are determined to be “reportable”. We expect FATCA will not have any impact on most of our Members.
How will you determine if I have “reportable accounts”?
Personal Accounts
For most of our personal banking Members, information we have on file will allow us to determine that no reporting is required.
If the information you have provided indicates that reporting may be required for your accounts, we will ask you to provide additional information — possibly in the form of new documentation regarding your U.S. tax status. We will then review the information you provide against the applicable requirements to determine whether or not your accounts are reportable.
Non-personal Accounts
For most of our Business Banking Members, the documentation we have on file will allow us to determine that no reporting is required.
If your business is an entity for which we are required to obtain additional documentation, we will ask you to provide that documentation. We will then review the new documentation against the applicable regulations to determine if your accounts are reportable.
What type of information will be reported to the U.S. via the CRA?
The following information will be reported:
- Identifying information about the account holder (name and address)
- Account number
- Account balance or value at the end of the year
- Certain amounts paid or credited to the account
- TIN (tax identification number)
Can you give me advice on how to respond to questions and requests related to FATCA?
Tax law is a highly specialized field. While we can provide general information on FATCA and related local regulations, we are prohibited from providing tax advice. If you want advice on how to respond to questions and requests related to FATCA, we recommend that you speak with a professional tax advisor.
How will FATCA affect me if I am a “U.S. person”?
If you are a U.S. person, we may be required to ask you to provide your TIN (Taxpayer Identification Number and Certification) In addition, we may be required to report your account to the CRA on an annual basis. This should have no impact to you if you are already meeting your existing U.S. tax filing obligations, but we encourage you to review this with a professional tax advisor.
When does FATCA take effect?
FATCA will come into effect in stages beginning July 1, 2014. On that day, financial institutions must begin to:
- Use new account opening procedures to identify U.S. person(s) at the time of opening an account.
- Review existing accounts to identify those that may be subject to reporting, where information associated with your account suggests that you may be a U.S. person.
You might be asked to provide certain evidence to support a claim that you are not a U.S. person.
Are all banks complying?
The Agreement generally applies to all types of financial institutions. There are some exemptions depending on the total assets held by the financial institution.
Don’t you need my consent to share my information?
Meridian is committed to keeping our Members’ personal information accurate, confidential, secure, and private. Our response to FATCA will be held to our standard of strict compliance with privacy rules, and our approach will follow our commitment to Member privacy and service.
In cases where a Member may be impacted, Meridian will assist the Member to ensure that their situation is handled appropriately.
What happens if I refuse to answer FATCA-related questions or complete FATCA-related forms?
If you choose not to meet requests necessary in determining your U.S. tax status, your account may be treated as reportable and certain information may be reported to the CRA.
Does FATCA apply only to personal bank accounts?
No, FATCA applies to many other types of financial accounts, including certain business accounts, insurance contracts, and investment or brokerage accounts.
I have an account in U.S. dollars. Does this mean my accounts will be reported to the IRS?
No, the currency of an account has no impact on whether or not it is treated as a “reportable account”.
How are joint accounts handled under FATCA?
If at least one of the joint owners qualifies as a U.S. person, any required reporting would treat the U.S. person as the owner of the entire account. If more than one of the joint owners are U.S. persons, any required reporting would treat each U.S. person as the owner of the entire account.
I am a Canadian resident, but I spend part of the year in the U.S. How am I impacted by FATCA?
If you are a Canadian resident who spends part of the year in the U.S., (snowbird or attending school), you may be identified as potentially being an U.S. person account holder because of information associated with your account, such as a U.S. address or telephone number. You may be requested to provide documents showing that you are not a U.S. resident or U.S. citizen.