Closed TFSAs in 2014, are 3520/3520A forms still required?

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Feb 03, 2015 12:48 pm

For my 2013 return I filed 3520/3520A forms as I had a TFSA.

I closed the TFSA in July 2014, for my 2014 return are 3520/3520A forms still needed as the TFSA existed for part of the year?

nelsona · Post by **nelsona** » Tue Feb 03, 2015 1:21 pm

Yes, and FBAR, PFIC, and FATCA requiremnts too if thresholds are met,

taxeve · Post by **taxeve** » Thu Feb 12, 2015 10:15 am

Regarding TFSA : What if TFSA was only simple bank savings account, not a trust. Are forms 3520 and 3520-A still required?

nelsona · Post by **nelsona** » Thu Feb 12, 2015 10:46 am

The position that has been adopted is that uinless the bank can specifically say that it was NOT a trust, then it is a trust,

You can have an RRSP that is just a savings account, and it is a trust, both in CRA and IRS definition, so there is precedent.

taxeve · Post by **taxeve** » Thu Feb 12, 2015 10:55 am

Thanks. I will ask the bank for a statement to affirm that it is not a trust but only a simple bank account.

Buddy · Post by **Buddy** » Sat Feb 21, 2015 5:30 pm

Iâ€™d just like to add that a trust arrangement between an account holder and a financial institution must be stated in writing (i.e. an â€œexpress trustâ€). The place where a bank â€œsaysâ€ (or, more commonly, â€œdeclaresâ€) that a given account is a trust is in the terms of that account (usually given to the account holder when the account is opened, and/or found (often buried) on the institutionâ€™s website).

If an account is a trust, its terms will include a form of trust agreement, or declaration of trust, in which it is expressly stated that the institution is appointed trustee for the account holder (using words such as: â€œWe agree to accept the position as trustee of the TFSA . . .â€; â€œThe Trustee . . . agrees to act as trustee of the account on behalf of the holder . . .â€; or We, . . . hereby declare that we accept the trust created between us and the Holder when the Application was signed . . .â€). There must be some form of trust agreement, and, indeed, 3520/3520-A require that that agreement, the â€œtrust instrumentâ€ (the document which created the trust) be attached to those forms.

Unless an intention to create a trust is expressly stated within, or appended to, the terms of a given account, that account is not a trust.

taxeve · Post by **taxeve** » Sat Feb 21, 2015 6:29 pm

Mr. Buddy: Thanks for the explanation. So then, as I now understand it, if the account was opened as a TFSA simple bank deposit savings account, it is not a trust as there was no explicit declaration by the bank of it being a trust. It is, by default, not a trust. Right ?

wlasicn · Post by **wlasicn** » Sat Feb 28, 2015 4:32 pm

I have a similar situation where I had a 2012 and 2013 3520/3520A filed.

I closed the account in 2014. Since the account had prior paperwork and existed for a good part of 2014 - do I need to file the 3520/3520A as final returns in 2014 so IRS no longer expects this?

If so, how do I balance it to $0?

I transferred the funds into a simple savings so there is no distribution that should be taxable?

Please help if you can.

Subaron · Post by **Subaron** » Sun Mar 22, 2015 6:49 pm

[quote="wlasicn"]I have a similar situation where I had a 2012 and 2013 3520/3520A filed.

I closed the account in 2014. Since the account had prior paperwork and existed for a good part of 2014 - do I need to file the 3520/3520A as final returns in 2014 so IRS no longer expects this?

If so, how do I balance it to $0?

I transferred the funds into a simple savings so there is no distribution that should be taxable?

Please help if you can.[/quote]

Did you ever find out the answer to your question?
If not, does anyone else know the answer? Thanks.

taxeve · Post by **taxeve** » Sun Mar 22, 2015 7:49 pm

Hi Subaron,
According to brief guidance from BDO (According to Wikipedia, BDO International is the fifth largest accountancy network in the world), "If the TFSA is not a set-up as a trust there is no filing requirement of form 3520/3520-A. However, the TFSA is not recognized by the IRS; that means the income generated in the TFSA should be declared on the US tax return of the owner."
So, I will personally go by the quoted advice.
Please post if you are able to affirm this info from still another source as opinions may very on the subject.
Thanks,
Taxeve

Subaron · Post by **Subaron** » Mon Mar 30, 2015 5:20 am

taxeve, this is what I found and will be going with it.
http://connect.cch.ca/newsletters_Finan ... 3_article3

Btw, TFSA's can be set up as Annuity, Trust or Deposit. Tangerine TFSA Savings account looks like a regular deposit account anyhow.

nelsona · Post by **nelsona** » Mon Mar 30, 2015 1:21 pm

Just to clarify, just because an account is "not set up as a trust" in canada, does not mean that it is not a foreign grantor trust in US. Cdn financial industry has a diffeent notion of what a trust is.

Absent of a specific statement from the TFSA manager that the TFSA is NOT a trust, one should, in my opinion, (and the opinion of the cch posting above), assume that it is.

nelsona · Post by **nelsona** » Mon Mar 30, 2015 1:22 pm

Subaron, you need to sumbit 3520/3520A if you had the account at anytime in 2014. you will be free of this only in 2015.