FATCA & CRS Compliance
The Foreign Account Tax Compliance Act (FATCA), Common Reporting Standard (CRS), and how it may affect SCU Members
The Facts on FATCA
In 2014, Canada and the United States signed an inter-governmental agreement known as the Foreign Account Tax Compliance Act (FATCA). This Act requires Canadian financial institutions, SCU included, to identify and report U.S. members to the Canada Revenue Agency (CRA).
What is a U.S. person for U.S. tax purposes?
A citizen of the U.S., including an individual born in the U.S. but resident in another country, who has not renounced U.S. citizenship
A lawful resident of the U.S., including a U.S. green card holder
Certain persons who spend a significant number of days in the U.S. each year. For example, some Canadian “snowbirds” may be considered U.S. persons. However, the CanadaU.S. tax treaty allows them to claim benefits in order to be treated as Canadian rather than U.S. taxpayers. Similar relief is provided under many other treaties with the U.S.
U.S. corporations, U.S. estates, and U.S. trusts
According to the CRA, “In Canada, your tax status is not generally determined by your citizenship(s). However, the U.S. taxes on the basis of both residency and citizenship. Canada has agreed to identify U.S. residents and U.S. citizens with certain financial accounts in Canada. Your Canadian financial institution may ask whether you are a U.S. person, and may explain to you that the U.S. will tax you on the basis of citizenship as well as residency”.
The Facts on CRS
The Common Reporting Standard (CRS) is an international reporting standard for automatic exchange of financial account information between tax administrations. The purpose of this standard is to promote voluntary compliance with tax laws, and prevent tax evasion.
Canada and more than a hundred other jurisdictions have agreed to commit to its implementation. As of July 2017, Canadian financial institutions, SCU included, must identify accounts held by members who are tax residents in countries other than Canada or the U.S. and report about these members to the CRA.
What is the definition of a reportable person for CRS tax purposes?
An individual or entity with tax residency in a country other than Canada or the U.S.
A person may be considered a tax resident of, and reportable in, more than one country at the same time
How is SCU dealing with FATCA and CRS legislation?
SCU has a committed FATCA and CRS compliance officer whose role is to understand these regulations and their potential impact to our members.
We diligently review FATCA and CRS regulations to ensure we are reporting accurately, while maintaining our high standards for privacy.