Archived - Canada and U.S. Reach Agreement on Foreign Account Tax Compliance Act

February 5, 2014 – Ottawa, Ontario – Department of Finance

Finance Minister Jim Flaherty and National Revenue Minister Kerry-Lynne D. Findlay today announced that, after lengthy negotiations, Canada and the United States have signed an intergovernmental agreement under the longstanding Canada-U.S. Tax Convention.

In March 2010, the U.S. enacted the Foreign Account Tax Compliance Act (FATCA). FATCA would require non-U.S. financial institutions to report to the U.S. Internal Revenue Service (IRS) accounts held by U.S. taxpayers. Failure to comply with FATCA could subject a financial institution or its account holders to certain sanctions including special U.S. withholding taxes on payments to them from the U.S.

FATCA has raised a number of concerns in Canada—among both dual Canada-U.S. citizens and Canadian financial institutions. One key concern was that the reporting obligations in respect of accounts in Canada would compel Canadian financial institutions to report information on account holders who are U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) directly to the IRS, thus potentially violating Canadian privacy laws.

Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014.

Today’s agreement addresses these concerns, as well as others.

Marie Prentice
Press Secretary
Office of the Minister of Finance

Jack Aubry
Media Relations
Department of Finance Canada

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