Final FATCA Regulations Can Have an Impact on Canadian Entities

Summary: The US Internal Revenue Service (IRS) has issued long-awaited final regulations (the Final Regulations) under the Foreign Account Tax Compliance Act (FATCA). FATCA, designed to police non-US investments, accounts and trust interests held by certain US persons, was initially enacted in March 2010 but is only beginning to take effect this year. FATCA has significant impact on Canadian and other non-US financial institutions, including Canadian banks and investment funds, as well as on certain other Canadian entities. The Final Regulations set forth steps that must be taken by covered entities so as to avoid potential US withholding tax under FATCA, and include provisions coordinating FATCA compliance under certain intergovernmental agreements as an alternative to compliance under the Final Regulations.