ARTICLE · 21 OCTOBER 2014

The Skinny On FATCA

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The Foreign Account Tax Compliance Act is a complex reporting and withholding regime enacted by the U.S. government in March, 2010.

CanadaTax

Kevin Cohen

What is FATCA?

The Foreign Account Tax Compliance Act ("FATCA") is a complex reporting and withholding regime enacted by the U.S. government in March, 2010 that is expected to become operational on July 1, 2014. FATCA was designed to combat tax evasion by U.S. taxpayers holding assets through non-U.S. financial institutions. Under FATCA, non-U.S. financial institutions around the world, including Canadian financial institutions ("Canadian FIs"), could be subject to a 30% withholding tax on certain U.S. source payments (including interest and dividends) made to/paid by the non-U.S. financial institution unless certain account verification, due diligence, registration and reporting requirements are complied with.

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