U.S. and Canada sign Tax Avoidance Agreement
The list of countries signing deals with the United States has grown to twenty-two (22) now that Canada and the United States have signed a tax-information sharing agreement to crack down on tax avoidance by U.S. taxpayers.
The intergovernmental agreement (“IGA”) prevents Canada from having to hand over information to the Internal Revenue Service under FATCA and instead, Revenue Canada collects information from Canada’s banks and share it with the IRS under an existing bilateral tax treaty. FATCA was signed in 2010 and was originally scheduled to take effect on January 1, 2013. But in 2011, the effective date was moved to January 1, 2014 and then moved forward again to July 1, 2014.
The IGA exempts some smaller financial institutions and certain Canadian registered savings plans.
While it is estimated that there
about 1,000,000 citizens of the U.S. residing in Canada, it is unclear how many U.S. Citizens would be affected by the IGA.
Banks are scheduled to commence collecting information in July and Revenue Canada will commence reporting to the IRS in 2015.