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Details

  • Industry: Public Sector (PS), Not for Profit
  • Type: Business and industry issue, White paper
  • Date: 4/3/2014

US Foreign Account Tax Compliance (FATCA) and Not-For-Profit Entities 

Generally, “withholdable payments” made to certain foreign persons after June 30, 2014 (or after December 31, 2016 for gross proceeds) may be subject to a punitive 30 percent withholding tax if the relevant payer has not obtained the necessary documentation certifying the FATCA status of the recipient.

 

Not-for-profit entities must determine their status under FATCA to assess any possible reporting and/or withholding obligations and avoid potential penalties.

US Foreign Account Tax Compliance (FATCA) and Not-For-Profit Entities
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A Canadian not-for-profit entity would generally be classified as one of the following Expected NFFEs under FATCA:

 

  1. A "Section 501(c) Entity"
  2. A Canadian non-profit organization
  3. An Active NFFE.

 

If it qualifies as an Excepted NFFE or an EBO, a not-for-profit entity may avoid FATCA disclosure obligations by providing payors of US-source withholdable payments with a certification of its status as such.

 

Not-for-profit entities should be prepared to certify their classification on updated documentation (i.e., Form W-8BEN-E) when requested by a US withholding agent. They should also be prepared to provide a reporting CFI with documentation and/or other information, as requested, so that the reporting CFI with whom it transacts business can satisfy its due diligence and reporting requirements.

 

KPMG in Canada’s multidisciplinary team of tax and advisory professionals can help your multinational Canadian company meet its FATCA requirements. We provide FATCA advice to a wide range of financial services and general business organizations and can assist you in determining the FATCA categories for entities in your organization. To discuss any aspect of FATCA, please contact your KPMG adviser.

 

 Contact

Russell W. Crawford

Russell W. Crawford

Partner, Tax

604-691-3516

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