Thursday, February 6, 2014
Canada Signs Tax-Sharing Agreement with U.S.
Reuters is reporting that Canada has signed a tax information sharing agreement with the United States. This means that the Canadian government has agreed to share information on U.S. taxpayers obtained from Canadian banks with the I.R.S. The ultimate goal of this agreement is to prevent offshore tax evasion by U.S. citizens who seek to hide their assets from their home country to avoid paying taxes. According to the article, similar agreements have been made between the U.S. and 22 other countries, including a recent agreement with Hungary. By signing the agreement, Canada was able to avoid the stricter guidelines of the Foreign Account Tax Compliance Act, Pub. L. 111-147, 124 Stat. 97-110 (2010), passed by Congress on March 18, 2010. According to the article, this act would have mandated that Canadian banks disclose information on U.S. citizens' accounts that are more than $50,000 and would have implemented a 30% withholding tax on foreign entities that are non-compliant. Instead, Canada will share information with the I.R.S. under the provisions of the current tax treaty already in force. The full text of the agreement is available on the Canada Department of Finance's website.
Labels: Legal News