To those U.S. citizens living in Canada.
Canada and the United States have signed a tax deal under which Canadian banks will try to identify accounts held by American citizens and report them indirectly to the IRS, using the CRA as a go-between.
The arrangement solves a problem for the banks, which were caught between facing a punitive 30 per cent tax on their U.S. investments under the Foreign Account Tax Compliance Act if they didn’t sign on to the disclosure agreement, and potential breaches of Canadian privacy law if they dealt directly with the IRS.
It has been decried by dual citizens and Americans in Canada as a violation of privacy and a way for the IRS to keep tabs on people with no financial ties to the U.S.
Finance Minister Jim Flaherty’s office announced the deal Wednesday. It takes effect July…
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