OTTAWA Feb 5 Canada has signed a
tax-information sharing agreement with the U.S. Treasury
Department ahead of a new U.S. law that will crack down on
offshore tax avoidance, senior Canadian finance officials said
The agreement, which is one of 22 so-called
intergovernmental agreements (IGA) between Washington and
individual countries, comes ahead of the implementation in the
United States in July of the Foreign Account Tax Compliance Act
FATCA would have forced Canadian banks to hand over
information to the U.S. tax-collecting Internal Revenue Service
(IRS) on U.S. citizens' accounts worth more than $50,000.
Instead, the IGA allows Canadian tax authorities to collect
information from the country's banks and share it with the IRS
under an existing bilateral tax treaty.
The Canadian officials told reporters in a briefing session
that the agreement addresses serious privacy concerns they had
with the original FATCA, which would have also imposed a 30
percent withholding tax on foreign businesses that do not comply
with the law.
The IGA also narrows the scope of information required to be
collected from account holders in Canada, the officials said.
Some smaller financial institutions will be exempt as well as
certain registered savings vehicles such as Canadian registered
retirement savings plans.
Banks will start collecting information in July of this year
and the Canada Revenue Service will begin reporting to the IRS