Are you ready for FATCA? | KPMG | BS

Are you ready for FATCA?

Are you ready for FATCA?

You may be a “Financial Institution” and not know it.

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FATCA

The Foreign Account Tax Compliance Act (FATCA) is a comprehensive withholding and reporting regime enacted by the U.S. government to combat offshore tax evasion by U.S. people. In 2014, Canada entered into an intergovernmental agreement (IGA) with the U.S. and enacted Canadian tax legislation that in effect requires Canadian financial institutions (FIs) to comply with FATCA.

The determination as to whether an entity is an FI for FATCA purposes is a complex exercise and should be undertaken for all of the companies in your structure by applying the rules in the U.S. domestic law, the Canadian IGA, and the Canadian Income Tax Act.

For Canadian FIs, a key date was July 1, 2014, which is the date they were generally required to begin enhanced due diligence and identification procedures for new client accounts. Upcoming key dates include:

2015

  • May 1, 2015 - U.S reportable accounts identified in 2014
    must be reported to the Canada Revenue Agency (CRA)
  • June 30, 2015 - Due diligence on pre-existing "high value"
    individual accounts must be complete.

2016

  • May 1, 2016 - U.S reportable accounts identified in 2014 and 2015 must be reported to the CRA 
  • June 30, 216 - Due diligence on pre-existing "low value"
    and entity accounts must be complete.

Given the complexity of the FATCA rules, entities should carefully examine
their implementation programs to help ensure that they are complying with the material documentation, due diligence, and reporting requirements that FATCA imposes. Various penalties apply for failure to report and for failure to
maintain adequate documentation. 

Please speak to your KPMG contact or one of our FATCA advisors for further
information or advice in respect of the legislation and the impact for you.

 

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