Just when you thought that you were pretty well up to date with what is going on with the CRA and how it relates to you for your tax filing, another big tax topic hits the news. You as a tax payer are hoping it has nothing to do with you, but still you are a little leery as you read about this FATCA being related to issues with Canadian Banks, and you just happen to be a bank customer.
First of all FATCA stands for U.S. Foreign Account Tax Compliance Act, and comes into effect in July. The purpose of this act is to allow the USA a means of being able to keep track of the financials of US citizens so the IRS can make sure that these individuals are paying the required taxes. It is supposed to serve as a purpose of not allowing US residents to go to other countries to hide income that would be potentially taxable under USA law.
In respect to Canada, in order for this to be successful for the USA it meant that Canada would have to be willing to share specific banking information concerning some of the applicable clients with the IRS. This originally was a big contention that the Canadian government had many objections to which were on par with the Canadian Banks reluctance to participate. As a result there was no set agreement made between the USA and Canada until now.
While the Canadian government feels that they have come to a suitable agreement that has been signed between the two countries, the Banks are not overly pleased with this.
One of the biggest arguments was the privacy breech that would occur should the Banks share information directly with the IRS. This apparently has been overcome with the signed agreement indicating that the Banks will release the pertinent information to the CRA who in turn will then release it to the IRS. This allows the tax payer involved to have an appeal resource to resort to under the CRA regulations, and lets the Banks off the hook.
The other big beef the Banks have is the huge cost they feel they are facing to have to set a system in place to implement the appropriate collection of pertinent information. This no doubt is going to eat into the high profit margins that they currently enjoy.
The bottom line is that US citizens must file taxes no matter where they live, and unfortunately there are many US citizens living in Canada who didn’t realize this.
If you are a US citizen living in Canada or suspect you have an IRS tax obligations, then why not allow us to help you with your Canadian tax returns. Contact us here at Toronto accountant at 416-398-1700, and let’s see where we can help.
