# Consq of new FATCA rules on Americans in Canada (RESP & TFSAs)



## none (Jan 15, 2013)

Can someone more familiar with these issues give some insights on how these new rules affect Americans now living in Canada? I'm most interested in how this now affects TFSA's and RESPs.

My current understanding is that TFSAs and RESP aren't really worth it for Americans (even those with dual citizenship) as they are not protected under the tax treaty.

Here: http://www.ctf.ca/CTFWEB/EN/Newsletters/Canadian_Tax_Focus/2013/1/130102.aspx

Do the new rules now change this? Should all my American friends now living in Canada now open up RESPs?

Thanks!


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## AltaRed (Jun 8, 2009)

Not unless americans want to run foul of IRS taxation laws requiring the reporting of world wide income, i.e. tax evasion. All the new FATCA rules do is reduce the burden on Canadian financial institutions (and CRA) to report the existence of RESPs and RRSPs to the IRS.


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## Four Pillars (Apr 5, 2009)

Deleted - incorrect info.


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## none (Jan 15, 2013)

From this it looks like TFSA and RESPs may now be covered: http://www.cbc.ca/news/politics/fatca-tax-deal-with-u-s-takes-some-heat-off-canadian-banks-1.2524444


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## Eclectic12 (Oct 20, 2010)

... no direct experience but a quick glance through seems to indicate FATCA is around getting information about foreign accounts that might not be reported correctly.

As there does not seem to be a reference to either account being shifted from a taxable account to a tax deferred or tax free account (and I can't think of why a US gov't that wants money would change the status), my bet is these are still taxable.


I'm not a US - Canada tax expert so we'll see if anyone with more experience has more details to provide.


Cheers

*PS*

Based on the link upthread about the deal Canada reached - the status has changed somewhat ... though there seems to be some vague parts.


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## james4beach (Nov 15, 2012)

I'm not even an American (I'll just be living there temporarily) and this stuff even affects me, so it most certainly does affect a US citizen. And yes it involves all non-US accounts, including TFSA and RRSP.

*You must look into your obligations to file (report) both FBAR and Form 8938*. These are independent things and you may have to report both. They go to different places, too.

Believe me when I say this is serious stuff and you have to get good professional advice NOW.

Other people affected are US green card holders, temporary US residents, snow birds, and other visitors who vacation in the US (no matter their citizenship). The scope is incredibly wide, they've gone totally nuts with these new laws


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## AltaRed (Jun 8, 2009)

As I understand it, the change in FATCHA rules only affect (reduce) whatCdn financial institutions (and CRA) need to report to the IRS. It does not change what US residents and citizens need to do to report their ex-USA holdings and income.


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## RCB (Jan 11, 2014)

http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf

Go to the last few pages, for the list of accounts NOT to be reported. They are registered accounts, including RRSP, RDSP, RESP, TFSA. Of course, not reportable DOES NOT mean not taxable.

Your thread title is also a bit misleading, as is most of the media coverage. Americans are not the only ones affected. If the US wants to deem you to be a "US person" for tax purposes, they will. This includes people, such as myself, that they had previously informed they were NOT US citizens. Nice scam they have going on, and our government is facilitating it under the guise of the lesser of two evils.


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## none (Jan 15, 2013)

I wasn't looking for an over-all overview I've just been offering colleagues financial advice (nothing more than explaining couch potatoes, differences between TFSA & RRSP & RESP etc etc). Some of them are american and I've suggested they shy away from the TFSA and RESP because of the tax issues. I was wondering how the new FATCA rules changes those specific investment vehicles.


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## RCB (Jan 11, 2014)

As far as can be seen, FATCA changes nothing regarding taxation of those accounts.


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## none (Jan 15, 2013)

yeah, nothing for sure yet but a few news stories allude that they were somehow negotiated in as part of 'the deal'. Anyway, I guess I'll wait to see. Thanks for your input.


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## RCB (Jan 11, 2014)

They were negotiated into FATCA as non-reportable accounts by the CRA to IRS. It's a pretty confusing topic. Nothing about tax law, or reporting (ie. FBAR) law has changed for individuals. Still screwed.


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## fatcat (Nov 11, 2009)

since i hold both citizenships i have been winding my way through this for several years
this is a useful website: http://americansabroad.org/

this gives you a look at the different requirements between fatca and fbar: http://americansabroad.org/files/7213/4764/1759/fatcaandfbarrules.pdf

fatca occurs _inside_ your IRS tax return, you report your accounts (look at the above pdf to determine which) as part of your return to the IRS
the FBAR is filed directly to the treasury department as a seperate document (and as of now is *required* to be filed electronically)

americans have always been required to file on all their worldwide income, this has never changed

the real problem is all the specialized requirements for what the IRS considers trusts and so on
like last year i had to file a special form and pay tax on my mutual funds (which i am in the process of dumping to avoid this)

having a tfsa is out of the question because it will cost more to have an accountant prepare the form than you will save on taxes

if indeed, we no longer have to file a special form for the tfsa (but i assume it will still be taxable in the usa but might be offset by other credits) that will be a great day because i can finally get in on the fun


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