What is the Foreign Account Tax Compliance Act (FATCA)?
By ATB Financial 25 October 2018 2 min read
The Foreign Account Tax Compliance Act (FATCA) is an American law that aims to prevent US taxpayers (also called US "persons") from using accounts held outside the US to evade American taxes. This law applies to US persons and to dual US-Canadian citizens.
How it works
All financial institutions in Canada--including ATB--are required to identify and report annually on financial accounts held by US persons to the Canada Revenue Agency (CRA). The CRA then forwards this information to the United States Internal Revenue Service (IRS).
FATCA was signed into United States law in March 2010. ATB and other Canadian financial institutions began gathering FATCA-related customer information in July 2014 and reporting to the IRS in March 2015. Effective July 1, 2014, ATB and other financial institutions are required by law to ask customers to self-certify their tax residency each time we open a new account (not all account types fall under this legislation--see information on exempt account types below) or when we are made aware of a change in US tax residency. Account types and financial products that are deemed low risk for tax evasion are exempt from FATCA, including:
- Registered Retirement Savings Plans (RRSPs)
- Registered Education Savings Plans (RESPs)
- Registered Retirement Income Funds (RRIFs)
- Registered Disability Savings Plans (RDSPs)
- Registered Pension Plans (RPP)
- Tax-Free Savings Accounts (TFSAs)
- Agri-Invest accounts
- Mortgages, Loans, Lines of Credit
Please note this is not an inclusive list. To confirm whether your ATB account is exempt from FATCA reporting requirements, contact the ATB team member you typically deal with, call us at 1-800-332-8383 or drop by any branch.
Who is affected
According to FATCA, you are considered a US person if you are:
- A citizen of the US (including those born in the US but resident in Canada or another country who have not renounced their US citizenship)
- A resident of the US (including US green card holders)
- An entity (that is a business or nonprofit, including estates and trusts) that is a tax resident of the US or is a passive entity with one or more controlling persons who are US reportable persons.
Please note this is not an inclusive list. If you're impacted by FATCA, we’re here to help—but we recognize that we're not tax experts. ATB cannot provide tax advice to customer. If you are unsure about your tax residence, speak with a professional tax advisor.