The Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act (FATCA) is a US law that was passed in March 2010 to discourage “US Persons”1 from evading US tax by using financial accounts held outside the US. FATCA requires the identification and reporting of information to the US Internal Revenue Service (IRS) on certain financial accounts held outside the US by US Persons. The US has signed a number of agreements with other countries to implement FATCA, including Canada. The requirement for Canadian taxpayers, including financial institutions, to comply with FATCA has been incorporated into Part XVIII of Canada’s Income Tax Act. Since 2014, Canadian financial institutions are required under Canadian law to identify and report information to the CRA on reportable financial accounts held in Canada by US Persons.