Under the new deal, Canadian financial institutions will report information on accounts held by U.S. citizens directly to the Canada Revenue Agency (CRA), which will exchange the information with the IRS, adhering to existing provisions and safeguards, and the privacy act.
“It is definitely a good thing that Canadian financial institutions don’t have to carry this burden …,” says Altro. “As far as the individual – U.S. citizens in Canada – it is another step in the direction that this is happening. The net result is that the IRS has access to their information.”
Another positive outcome from the deal, Altro notes, is the exemption of accounts including Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Fund (RRIFs), Registered Education Savings Plans (RESPs), Registered Disability Savings Plans (RDSPs) and Tax-Free Savings Accounts (TFSAs).
“This is potentially a good sign because right now accounts like TFSA and RSPs, while they may be exempted from FATCA, they are not recognized as a tax-free savings vehicle by the IRS,” says Altro. “They (the IRS) never had a position on it … that potential obstacle may be removed for Americans living in Canada down the road.”
Relax! FATCA's off your back!
Watch out! FATCA's on your doorstep, warns Toronto advisor