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FATCA Communication (français)

Important information on the impact of the Foreign Account Tax Compliance Act (FATCA)

The United States recently enacted the provisions known as the Foreign Account Tax Compliance Act (FATCA). FATCA was designed to assist the U.S. tax authorities in detecting tax evasion by U.S. persons and it applies in Canada.

How does this impact new business processing on or after July 1, 2014?

Our application forms for cash value insurance products and non-registered wealth products have been updated to include self-certification questions to determine if the account is held by a U.S. person.

For individual owners, the questions on the application forms are as follows:

  • Are you a United States citizen or resident of the United States for tax purposes? (yes / no)
  • If 'yes': Provide the U.S. Taxpayer Identification number (TIN): 111-22-4444

 

For entity owners (see Q&A below)

For either individual or entity owners, if the question or requested information is not answered at the time the application is submitted, we will process and settle the policy or contract. However we will request a separate form be completed.

Additionally, if the client's place of birth is in the U.S., we will process and settle the policy or contract. However we will request a separate form be completed.

If the client does not provide the required documentation in a timely manner (75 days), we will be required to report information about the client's financial account to the CRA even if they are not a U.S. person.

What does it mean for the client if they are a U.S. taxpayer?

If a client is a U.S. person, under the IGA and tax regulations we will be required to report information about the client's financial account to the CRA. The CRA will then send this information to the applicable U.S. authorities

For more information on FATCA or the IGA:

Canada Revenue Agency website: Enhanced financial account information reporting: http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/menu-eng.html

Department of Finance Canada website: FAQs: FATCA and the Intergovernmental Agreement for the Enhanced Exchange of Tax Information under the Canada-U.S. Tax Convention http://www.fin.gc.ca/afc/faq/fatca-eng.asp

Canadian Life and Health Insurance Association website: U.S. Foreign Account Tax Compliance Act (FATCA) http://www.clhia.ca/domino/html/clhia/clhia_lp4w_lnd_webstation.nsf/page/1EC2B7FB9077A50E85257BE5006CB74A?OpenDocument

For more answers about Equitable Life's forms or processes? Go to our Q&A (link) or contact your Regional Service Representative

Q&A

How does this impact new business processing for Entity Owners?

On or after July 1, 2014

We will request that our Business Information Form (594) be submitted along with the application. We will use the information provided in this form to determine our tax reporting requirements. Depending on the entity's FATCA classification, we may report to the Canadian Revenue Agency (CRA). The terms used in this form are defined by the Canada - United States Enhanced Tax Information Exchange Agreement Implementation Act. More information is available at www.cra-arc.gc.ca. Search 'enhanced financial account information reporting' and view their topic on entities.

What if the application was submitted prior to July 1, 2014, but the policy or contract has not been issued?

Self-Certification (answer to the question: Are you a United States citizen or resident of the United States for tax purposes?) is mandatory for contracts or policies issued on or after July 1, 2014.

For cases 'in progress' (new applications, re-opened policies, re-issued policies) at July 1:

  • If the policy or contract is printed before July 1st: no self-certification is required
  • If the policy or contract is printed after July 1st: FATCA self-certification is required

 

For either individual or entity owners, where the policy or contract was issued after July 1, 2014, and we do not have the information required, we will be requesting a separate form be completed.

If the client does not provide the required documentation in a timely manner (75 days), we will be required to report information about the client's financial account to the CRA even if they are not a U.S. person.

How does this impact the client if they have a change in ownership of the policy or contract on or after July 1, 2014?

For individual owners:

  • The Additional Updated Customer Information form (1027) - which is completed and submitted with the Name / Ownership Change form (671NOC), includes the same self-certification questions as on our applications.

 

For entity owners:

  • The Business Information Form (594) - which is completed and submitted with the Name / Ownership change form (671NOC) is the same form required with new business applications.

 

As indicated for new applications, if the question or requested information is not answered at the time the Name / Ownership change is submitted, we will proceed with the requested ownership change, however we will be requesting a separate form be completed.

Additionally, if the client's residence or bank account has a US address, we will process this ownership change, however we will be requesting a separate form be completed.

If the client does not provide the required documentation in a timely manner (75 days), we will be required to report information about the client's financial account to the CRA even if they are not a U.S. Person.

How does this impact the client if they have a change in address?

If the client's residence has changed to a U.S. address, we will process the requested address change. However we will request a separate form be complete, if the policy was issued on or after July 1, 2014.

 

What about policies or contracts in existence before July 1, 2014?

  • Pre-existing policies owned by individuals are exempt from this legislation, until such time there is either an ownership or contractual change to the policy
  • Pre-existing policy owned by certain types of entities are reportable if they're combined account values exceed $250,000

 

Why does this U.S. law apply in Canada?

In March 2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act, the United States (U.S.) enacted the provisions known as the Foreign Account Tax Compliance Act (FATCA). FATCA was designed to assist the U.S. tax authorities in detecting tax evasion by U.S. persons.

In response to FATCA, on February 5, 2014, Canada signed the Canada-U.S. Enhanced Tax Information Exchange Agreement (intergovernmental agreement - IGA). Under this agreement, Canadian financial institutions will be required to identify and report information to the Canada Revenue Agency (CRA) on accounts held in Canada by U.S. persons. The CRA will then send this information to the applicable U.S. authorities.