Complying with FATCA (Foreign Account Tax Compliance Act)

The Foreign Account Tax Compliance Act (FATCA) was passed by the U.S. government on March 18, 2010 and became effective on July 1, 2014. This legislation requires U.S. persons to report their assets held in offshore accounts to the Internal Revenue Service (IRS). It also requires non-U.S. financial institutions to report annually on the accounts of U.S. persons.

On February 5, 2014, the Canadian and U.S. governments signed an agreement with provisions to make sure FATCA’s reporting requirements do not violate Canadian privacy laws. Instead of Canadian financial institutions reporting directly to the IRS, all relevant information is sent to the Canada Revenue Agency (CRA). The CRA then exchanges the information with the IRS through the existing safeguards of the Canada-U.S. tax convention.

If you are considered a U.S. person and you have a Questrade account (either self-directed or Questwealth), as a non-U.S. financial institution Questrade is required to provide certain information to the CRA. This information is in turn exchanged with the IRS.

Who is a U.S. person?

According to the IRS's definition you may be considered to be a U.S. person if you meet one or more of these requirements:

• You were born in the U.S.
• You are a U.S. citizen or you hold lawful permanent residency (green card) status
• You have a U.S. residence or mailing address (including a P.O. box)
• Your “in care of” or “hold mail” address is your only address
• You have standing instructions to transfer funds to an account maintained in the U.S., or you regularly receive instructions from a U.S. address
• You have power of attorney or signatory authority granted to a person with a U.S. address

Meeting one of these requirements does not guarantee you are considered to be a U.S. person. Questrade may ask for additional information or documentation under FATCA to verify your status.

Note: you may be considered a U.S person if you spend a significant number of days in the U.S. within one year or over a number of years.

If you are a U.S. person, you’ve likely completed a W-9 form (request for taxpayer identification number and certification). Questrade sends this information to the CRA annually, which the CRA then sends to the IRS as required.

If you have a Questrade account and you are considered to be a U.S. person, we may ask for more information or documentation to determine your status under U.S. tax law.

FATCA requirements do not apply to registered accounts (only to Margin or Cash accounts)

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.