The Foreign Account Tax Compliance Act (FATCA) is a law that was passed in the United States. U.S. Persons are taxed on their worldwide income regardless of where they live. FATCA aims to combat U.S. tax evasion by U.S. Persons with financial assets outside the U.S. Therefore, FATCA is meant to encourage proper reporting of all investment income and all dispositions of securities by a U.S. person no matter where in the world the investment is held. Beginning July 1, 2014, non-U.S. financial institutions are required to identify, document and report on accounts held by U.S. Persons. To learn more about FATCA, visit the Canada Revenue Agency’s website.
Canadian Revenue Agency
Along with many governments, the Canadian government has entered into an Intergovernmental Agreement (IGA) with the U.S. to establish a simplified reporting process. Information on accounts held by U.S. Persons will be reported to the Canada Revenue Agency (CRA) and not directly to the Internal Revenue Service (IRS). The CRA will then exchange the information with the IRS through the existing provisions of the Canada-U.S. Tax Convention, which is consistent with Canada’s privacy laws.
As per FATCA regulations, certain financial accounts held by U.S Persons must be identified and reported by Financial Institutions to Tax Authorities.
BMOB M O Financial Group is complying with local legislation regarding the implementation of FATCA.
FATCA is primarily focused on U.S. Persons (individual or entity). The impact could vary:
If you are an individual accountholder (including sole proprietorships or an entity);
If you have an existing financial account or you are opening a new account
BMOB M O may request further information in order to confirm a U.S Persons' status for FATCA for either of the scenarios above. If you are a U.S. Person, BMOB M O is required to report account information to the CRA. If you are non-compliant and do not provide the necessary information, BMOB M O may be required to report account information to the CRA. Reportable status is determined as of December 31 of each respective year.
Generally, a U.S. Person is someone who is:
a Citizen of the U.S. including
individuals who hold U.S. citizenship but reside in another country who has not renounced their U.S. citizenship
a Resident of the U.S.
including U.S. green card holders
a non-exempt U.S. Corporation, U.S. Partnership, U.S. Estate or U.S. Trust
a person who spends considerable time in the U.S. in one year or over a period of years. For further information regarding your status as a U.S. Person, consult the IRS website or a tax advisor
The account holder's information such as address or place of birth is used to determine their status as a U.S. Person, not the account type.
Yes. Please refer to the "Who is considered a U.S. person?" For a full criteria of U.S. Persons, please review the following:
Internal Revenue Service
If you spend a substantial time in the U.S. over the course of a year or several years, you may be considered a U.S. person. If you are unsure of your status as a U.S. Person, consult the IRS website or a tax advisor.
Canadian Revenue Agency
In order to determine the applicability of FATCA, BMOB M O may require all joint account holders to submit additional documentation. The accountholder who is a U.S. Person will have their information and full account balance reported to the CRA.
If you are born in the U.S. you may be considered a U.S. Person. If you are born in the U.S. and you have renounced your U.S. citizenship AND obtained a Certificate of Loss of Nationality from the United States Department of State, you are not considered a U.S. Person.
In order to verify that you renounced your U.S. citizenship, you should submit all of the following documents:
a self-certification form (or W-8 BEN form) which demonstrate that the client is neither a U.S. resident for tax purposes nor a U.S. citizen; AND
evidence of the client's citizenship in a country other than the U.S. (i.e. passport or other government-issued identification); AND
a copy of the client's Certificate of Loss of Nationality of the United States
BMOB M O employees are not able to provide any legal or regulatory advice regarding FATCA. If you are seeking further information on how FATCA impacts you or your family, please consult a tax or legal advisor.
In order to verify an individual's status for FATCA purposes, you may be asked to provide additional documentation such as government-issued identification, and/or complete one of the following forms:
IRS Tax forms: W-8BEN, W-8BEN-E, W-8IMY, W-8EXP, W-9 or
BMOB M O FATCA self-certification document
The IRS has published instructions on completing these forms. It is recommended that individuals contact a tax advisor for information on completing IRS tax forms.
Accounts may be reportable under the following circumstances:
If an account is held or controlled by one or more U.S. Persons (inclusive of joint accounts held by at least one U.S. Person) and entities (specified U.S. Entities)
An account is held by a client who failed to comply with BMOB M O's request for additional information or documentation within the requested time frame
In 2015, the CRA will require all Canadian Financial Institutions to begin FATCA reporting. For accounts identified in 2014, this may include:
Account Holder’s Name
Address
U.S. TIN (Taxpayer Identification Number) or Date of Birth
SIN (Canada only)
Account Number
Market value of the account at year-end
Further financial information will be added to the reporting requirements in future years such as income and disposition.
FATCA impacts most of the following financial accounts:
Bank Accounts
Mutual funds
Brokerage accounts
Custodial accounts
Annuity accounts (including segregated fund contracts)
Certain life insurance policies with a cash value
Registered Products that are exempt from FATCA includes
Registered Retirement Savings Plan (RRSPs)
Tax Free Savings Accounts (TFSAs)
Registered Disability Savings Plans (RDSPs)
Registered Pension Plans (RPPs)
Registered Retirement Income Funds (RRIFs)
Pooled Registered Pension Plans (PRPPs)
Registered Education Savings Plans (RESPs)
Agrilnvest Accounts
Deferred Profit-Sharing Plans (DPSPs)
Estates
BMOB M O will contact the account holder to complete FATCA documentation if required.
If there is a change in your status as a U.S Person, it is your responsibility to inform BMOB M O as soon as possible.
Canadian residents may click on the link to view the acceptable documentation as identification to comply with FATCA:
Internal Revenue Service
As per Part XVII of the Income Tax Act, if a client or U.S. Person does not respond to BMOB M O's request for further information or documentation, we may be required to report certain information to the CRA.
We recommend you contact a professional tax advisor to understand your U.S. tax reporting requirements.
Only U.S. Persons are impacted by the rules of FATCA. BMOB M O will not assume that the spouse or children of a confirmed U.S. person are also U.S. Persons.
If your account was closed on or after July 1, 2014, and you were identified as a possible U.S. Person prior to closing your account; BMOB M O has an obligation to properly document the account.
The Internal Revenue Service (IRS) issues an identification number known as the Taxpayer Identification Number (TIN). Similar to the Canadian Social Insurance Number (SIN), it is used in the administration of tax laws. The Social Security Administration and the IRS can issue a TIN.
The IRS issues a 19-character identification number when a non-U.S. Financial Institution registers for FATCA purposes. This is known as the Global Intermediary Identification Number (GIIN).
