Hello all,
Just for information, I found a Canadian mutual fund that provides QEF statements for 8621 reporting. They are called Dimensional Fund Advisors Group based in BC. Here is the website.
www.dfaca.com
They have a range of Canadian, US and global equity funds, with typical MERs of 1.5%. The only catch is that they require a minimum investment of $10,000. Still something to consider - this is much more US tax effcient than making a mark-to-market election on 8621.
MGeorge.
A Canadian mutual fund that provides PFIC/QEF statements
Moderator: Mark T Serbinski CA CPA
Hi nelsona,
I did a google search for "QEF statements" - and piles of gold and mineral investment groups came up, I recall seeing a few aircraft leasing companies. The reason I did the search was, I saw a video on the basics of PFIC reporting and the potential pitfalls. The speaker said something like "Canadian mutual fund companies are not likely going to provide QEF statements - there's only 1 in Canada that does, that I'm aware of". He didn't say who, so I did the search.
Dimensional Fund Advisors came up well down on the list. It would benefit a lot of USCs in Canada if Canadian mutual funds were given an exemption from PFIC reporting - but I think the next best thing is if more ETF and mutual fund companies provided these QEF statements.
Just for fun, I compared the "ordinary earnings" and "net capital gain" from the QEF statement for one of the funds, with the T3 distribution. The income was completely different. The QEF earnings were much higher - by roughly 1.5% of the NAV (I wonder if the management expenses deduct from distributions in Canada, but the not in the US).
Best Regards.
I did a google search for "QEF statements" - and piles of gold and mineral investment groups came up, I recall seeing a few aircraft leasing companies. The reason I did the search was, I saw a video on the basics of PFIC reporting and the potential pitfalls. The speaker said something like "Canadian mutual fund companies are not likely going to provide QEF statements - there's only 1 in Canada that does, that I'm aware of". He didn't say who, so I did the search.
Dimensional Fund Advisors came up well down on the list. It would benefit a lot of USCs in Canada if Canadian mutual funds were given an exemption from PFIC reporting - but I think the next best thing is if more ETF and mutual fund companies provided these QEF statements.
Just for fun, I compared the "ordinary earnings" and "net capital gain" from the QEF statement for one of the funds, with the T3 distribution. The income was completely different. The QEF earnings were much higher - by roughly 1.5% of the NAV (I wonder if the management expenses deduct from distributions in Canada, but the not in the US).
Best Regards.
Here's the video:
http://www.investmentexecutive.com/-/ho ... ur-clients
He almost goes out of his way to say "there is one mutual fund company in Canada that provides QEF statements - but I can't tell you who".
We know www.dfaca.com does - I hope there will be more.
http://www.investmentexecutive.com/-/ho ... ur-clients
He almost goes out of his way to say "there is one mutual fund company in Canada that provides QEF statements - but I can't tell you who".
We know www.dfaca.com does - I hope there will be more.
Yes, they are PFICs. However, Canadian mutual funds are treated differently from US mutual funds, which is the sort of thing NAFTA is supposed to prevent w.r.t. cross-border trade.
It's like a Canadian manufactured widget. It may be a "foreign" widget as far as the US concerned, but due to NAFTA it should not be possible to establish trade barriers against the sale of the Canadian widget. It should be treated the same as the US manufactured widget.
Treating Canadian mutual funds differently from US mutual funds would seem to be a NAFTA violation, so I'm wondering why it isn't. This is especially so given that the whole foreign mutual funds as PFICs thing is the result of the successful lobbying efforts of the US mutual fund industry to establish this trade barrier.
It's like a Canadian manufactured widget. It may be a "foreign" widget as far as the US concerned, but due to NAFTA it should not be possible to establish trade barriers against the sale of the Canadian widget. It should be treated the same as the US manufactured widget.
Treating Canadian mutual funds differently from US mutual funds would seem to be a NAFTA violation, so I'm wondering why it isn't. This is especially so given that the whole foreign mutual funds as PFICs thing is the result of the successful lobbying efforts of the US mutual fund industry to establish this trade barrier.
Cdn mutual funds are not allowed to be sold cross-border, by SEC rules. Same for US mutuals by Provincial security commission rules. NAFTA doesn't enter into it -- it's not magical. In fact many Cdn mutual funds are not available throughout Canada!
So why you would expect they would get preferential PFIC is puzzling.
So why you would expect they would get preferential PFIC is puzzling.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Hello all,
Very good news. Fidelity Investments will start post PFIC QEF statements for their mutual funds.
http://www.fidelity.ca/cs/Satellite/en/ ... ments/pfic
I hope more follow suit!
Very good news. Fidelity Investments will start post PFIC QEF statements for their mutual funds.
http://www.fidelity.ca/cs/Satellite/en/ ... ments/pfic
I hope more follow suit!
Late to the party on this one, but I only realized last week that Fidelity is now providing PFIC annual information statements, and I just got mine in the mail yesterday. I am confused about how to use the information they have provided, though, since it is for the year May 1 2012 - April 30 2013 instead of January - December 2013. Does anyone know how to handle this? Thanks!
Hi Sarahp-
I have emailed Fidelity asking why they chose the fiscal year that they did. Their "tax people" have assured me that they understand that their investors are typically calendar year filers, and that the statements they provided will work just fine for our 2013 filings. Like you, I don't understand why they will work fine, but I have spent literally over a hundred hours trying to understand how all this PFIC reporting works (and I still feel like I am stumbling).
So, at this point, I am electing QEF on those funds I established this year, and attaching the Fidelity statement (and of course entering their $values on lines 6c and 7c on Form 8621.)
On the top part of page 1 of Form 8621, I am putting "shareholder tax year" as 2013 and a few cells down from that, putting "tax year of PFIC" as beginning May 1, 2012 and ending Apr 30, 2013. I am unsure if it is correct, but it is as logical as I can think of doing.
Remember to convert the $ values on the statements to US$ for reporting on 8621. I am using the yearly average of 1.071 (as posted on IRS site) for 2013 statements.
For any funds I started before 2013, I am doing a Deemed Sale Election ("D") as of Jan 1, 2013 and also electing to treat as QEF ("A") on the same 8621.
There is a really good spreadsheet that I found for calculations: http://www.aicpa.org/Publications/TaxAd ... s/PFIC.pdf I put it into excel to figure out the calculations and then am adopting it to my circumstances.
BTW- I called the international tax office to get some guidance on Form 8621 (one of my questions was going to be about the calendar/fiscal year difference in provided statements). The representative told me no one in the office can answer about Form 8621 or PFIC - it is outside of their scope and he will tell my the same thing he tells the tax lawyers and accountants who call for the same purpose: "to call the "High Council" - the lawyers who wrote the code in Washington, DC and ask for their interpretation" (whoever they may be?! -- I would say... we are on our own!)
Hope this helps.
I have emailed Fidelity asking why they chose the fiscal year that they did. Their "tax people" have assured me that they understand that their investors are typically calendar year filers, and that the statements they provided will work just fine for our 2013 filings. Like you, I don't understand why they will work fine, but I have spent literally over a hundred hours trying to understand how all this PFIC reporting works (and I still feel like I am stumbling).
So, at this point, I am electing QEF on those funds I established this year, and attaching the Fidelity statement (and of course entering their $values on lines 6c and 7c on Form 8621.)
On the top part of page 1 of Form 8621, I am putting "shareholder tax year" as 2013 and a few cells down from that, putting "tax year of PFIC" as beginning May 1, 2012 and ending Apr 30, 2013. I am unsure if it is correct, but it is as logical as I can think of doing.
Remember to convert the $ values on the statements to US$ for reporting on 8621. I am using the yearly average of 1.071 (as posted on IRS site) for 2013 statements.
For any funds I started before 2013, I am doing a Deemed Sale Election ("D") as of Jan 1, 2013 and also electing to treat as QEF ("A") on the same 8621.
There is a really good spreadsheet that I found for calculations: http://www.aicpa.org/Publications/TaxAd ... s/PFIC.pdf I put it into excel to figure out the calculations and then am adopting it to my circumstances.
BTW- I called the international tax office to get some guidance on Form 8621 (one of my questions was going to be about the calendar/fiscal year difference in provided statements). The representative told me no one in the office can answer about Form 8621 or PFIC - it is outside of their scope and he will tell my the same thing he tells the tax lawyers and accountants who call for the same purpose: "to call the "High Council" - the lawyers who wrote the code in Washington, DC and ask for their interpretation" (whoever they may be?! -- I would say... we are on our own!)
Hope this helps.
Hi Sunnysga,
Thanks very much for your reply and for letting me know what you've learned. What you said you're doing with the form makes as much sense as anything (which is not much, unfortunately!) I guess that as long as we keep filing every year, the offset years will be accounted for in the end when we sell the fund and would have a partial year anyway.
I've also spent many hours trying to understand this 8621 stuff (and 3520) and every time I think I've figured out something that at least makes sense, I either learn more or they change the form a bit. I've had similar experiences as you being told by the IRS helpline that this is all outside their scope. Paying a professional is prohibitively expensive given the relatively small value of my family's investments, so I guess the best I can hope for is to do the best I can and hope that by showing a good faith effort to do this right, we'll avoid audit and/or penalties.
Thanks again,
Sarah
Thanks very much for your reply and for letting me know what you've learned. What you said you're doing with the form makes as much sense as anything (which is not much, unfortunately!) I guess that as long as we keep filing every year, the offset years will be accounted for in the end when we sell the fund and would have a partial year anyway.
I've also spent many hours trying to understand this 8621 stuff (and 3520) and every time I think I've figured out something that at least makes sense, I either learn more or they change the form a bit. I've had similar experiences as you being told by the IRS helpline that this is all outside their scope. Paying a professional is prohibitively expensive given the relatively small value of my family's investments, so I guess the best I can hope for is to do the best I can and hope that by showing a good faith effort to do this right, we'll avoid audit and/or penalties.
Thanks again,
Sarah
I have another question about the QEF election on form 8621, just in case Sunny or someone else has figured this out. In my current case, the paperwork I got from Fidelity indicates no ordinary earnings (lines 6a/b/c on 8621) but does include capital gains (lines 7a/b/c). The instructions next to line 7c say that this is a net long-term capital gain and to enter it in Part II of Schedule D, but I can't figure out either where it goes on Schedule D (Part II lists a number of very specific cases, but I don't see how this fits any of those) or how to enter it in TurboTax to get it to magically make its way to the right part of Schedule D. Has anyone else figured this out?
Thanks in advance.
Thanks in advance.