Does FATCA apply to Canada?

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 IGA.

What is a Model 1 IGA?

Model 1 IGA: The partner jurisdiction agrees to report to the IRS specified information about the U.S. accounts maintained by all relevant FFIs located in the jurisdiction.

Is Canada a Model 1 IGA?

Countries with a Model 1 or Model 2 IGA already signed and in effect include: Australia (4-28-2014) Bulgaria (12-5-2014) Canada (2-5-2014)

What was the IGA between Canada and the US?

However the Isaac Brock Society leaked documents from CRA’s guidance notes that suggest that the Canadian federal government and Canada Revenue Agency (CRA) have undermined the intergovernmental agreement (IGA) with the U.S. which is aimed at catching American tax evaders living in Canada.

What did Canada have to do with FATCA?

Absent an intergovernmental agreement, FATCA would have required Canadian banks and other “foreign financial institutions” (FFIs) to enter into an agreement (FFI Agreement) with the IRS to identify U.S. accounts and report information on those accounts to the IRS (such an FFI is a Participating FFI).

What does the Iga do for Canadian FFIs?

The Canada IGA attempts to address those concerns by requiring Canadian FFIs to provide infor- mation on U.S. accounts to the CRA, which will make the information avail- able to U.S. tax authorities under the exchange-of-information Article (Article 27) of the 1980 Canada-U.S. income tax treaty.

Why are IGAS important in the implementation of FATCA?

IGAs with partner jurisdictions facilitate the effective and efficient implementation of FATCA. They remove domestic legal impediments to compliance. They reduce burdens on FFIs located in partner jurisdictions.