Is a 3520 unnecessary for a Tangerine TFSA?

Potassium · Post by **Potassium** » Tue Feb 24, 2015 1:18 pm

I had a Tangerine TFSA (which I closed in 2014).

Browsing this thread I saw a posting by Buddy stating that the Tangerine TFSA is not structured as a trust: http://forums.serbinski.com/viewtopic.p ... c&start=90

Does this mean therefore that a 3520 is not necessary for it?

Where in Part H is the relevant sentence/paragraph saying its not a trust? I read Part H but couldn't see the relevant part. http://www.tangerine.ca/en/legal/accoun ... .html#tfsa

Fructose · Post by **Fructose** » Tue Feb 24, 2015 1:59 pm

I found this, but its too difficult to follow

http://www.americanbar.org/publications ... 3520a.html.

It says this:

"An entity classified as a trust for U.S. tax purposes is a foreign trust if it fails either of the following tests: (1) the court testâ€”a U.S. court is able to exercise primary supervision over the administration of the trust; or (2) the control testâ€”one or more U.S. persons have the authority to control all substantial decisions of the trust".

But with a TFSA does an individual actually "have the authority to control all substantial decisions of the trust"? If so then why doesn't that same definition apply to other things where investment decisions are made by the U.S. person?

nohairleft · Post by **nohairleft** » Tue Feb 24, 2015 11:23 pm

Before you get to answering that question, you have to classify the entity. I read that statement as: " IF an entity is classified as a trust for US tax purposes, THEN it is also classified as a foreign trust if it fails either [...]."

I think the more important question is the first one, and that you don't have to bother answering any of the second questions if the answer to the first question is "no".

Potassium · Post by **Potassium** » Wed Feb 25, 2015 12:29 pm

If that's the case (if an entity is classified as a trust for US tax purposes is the main thing), then it would be irrelevant what Tangerine say.

How does one go about finding out if something is classified as a trust for US tax purposes? What other things apart from a TFSA might be classified as a trust? (I'm interested in finding the latter out as I have TFSAs, RRSPS, stock trading accounts, bank accounts, virtual gold accounts,...)

nohairleft · Post by **nohairleft** » Wed Feb 25, 2015 12:32 pm

If you look at the article you posted, there is a "Is There a â€œTrustâ€?" section that seems to describe what you are looking for.

It does matter what Tangerine says in some senses, in that their assertions of how the account is structured could presumably influence whether or not the US considers it to be a trust.

Potassium · Post by **Potassium** » Wed Feb 25, 2015 2:28 pm

Not filing a 3520 because Tangerine doesn't mention the word trust seems a case of "the absence of evidence is not the evidence of absence" ;-

IF the Tangerine TFSA is not considered to a trust and therefore a 3520 is not required, then is there some alternative form to 3520 that is required to be filled instead?

Or would the US filing requirements just be reduced to reporting income from the TFSA if applicable and listing it on the FBar?

nohairleft · Post by **nohairleft** » Wed Feb 25, 2015 3:03 pm

If it were me, I certainly wouldn't rely on a webpage...I'd at least call Tangerine and ask them, specifically, how their TFSA is structured.

Canadian law (http://laws-lois.justice.gc.ca/eng/acts ... .html#h-80) seems to allow TFSAs to be structured as one of the following:

* a trust
* an annuity
* a deposit

If the TFSA is considered a "trust" by Canada, then I'm hazarding a guess that it will probably meet the US definition of a trust too.

I doubt that you have a TFSA annuity.

The remaining option is a "deposit", as defined by Canada. It's above my pay grade to say if Tangerine's specific implementation of this "deposit" would be considered as a trust from a US point of view, but it seems plausible that it might not.

formerpatriot · Post by **formerpatriot** » Wed Feb 25, 2015 3:17 pm

Quote

Canadian law seems to allow TSFAs to be structured as one of the following:

* a trust
* an annuity
* a deposit

End of quote.

Interesting!

A TFSA with Epargne Placement Quebec, consisting only of "obligations Ã taux fixe", would be considered "structured as a deposit", right? Therefore, no need to bother with complicated 3520 and 3520A, right?

Potassium · Post by **Potassium** » Wed Feb 25, 2015 6:11 pm

I called Tangerine and they said their TFSA isn't trust but deposit.

I've been reading this board for a few years, and I have, perhaps like many here, up till this point assumed that a 3520 was an absolute necessity for a TFSA. You have a TFSA therefore you file a 3520, end of story.

But maybe that is not the case?

Not only that but accountants strongly advise to get rid of a TFSA once you leave Canada due to the reporting overheads that accompany it.
But if one has other Canadian accounts anyway, such as a bank, and has to file foreign interest income and FBAR for the bank account anyway, then its hardly any extra hassle to additionally report the TFSA income/FBAR details. And therefore there is not necessarily any strong need to get rid of the TFSA?

Sure its not as useful if the interest is no longer tax free, but the point is it could be kept there growing in case one day you return to Canada.

It would be good to know if this is misguided speculation or is actually the case, and some of use no longer have to bother with 3520s and closing TFSAs.

nelsona · Post by **nelsona** » Wed Feb 25, 2015 10:51 pm

The fact that ING deposit TFSA was not a trust has been mentionned here YEARS ago.

Potassium · Post by **Potassium** » Thu Feb 26, 2015 12:55 am

Last year I hired an account to get my returns into order as I had not been doing FBARs/2530 etc. for a couple of years.

He charged a lot for filing 3520s for two Tangerine TFSAs. Did he therefore do something that was unnecessary? And if so was that a lack of due diligence on their part?

Potassium · Post by **Potassium** » Thu Feb 26, 2015 12:56 am

[quote]2530 [/quote] should of course have said 3520.

zad888 · Post by **zad888** » Thu Feb 26, 2015 12:56 am

Hi Nelsona,

If an ING TFSA is considered a deposit and therefore no 3520/A filing requirement is needed. Is this correct?

Does it also include an ING TFSA GIC as being considered a deposit and not a trust?

Fructose · Post by **Fructose** » Thu Feb 26, 2015 11:29 am

MY accountant said for the purposes of IRA all TFSAs are considered as foreign grantor trusts as they do not meet the definition of a deposit account thus 3520/3520A should be filed.

nelsona · Post by **nelsona** » Fri Feb 27, 2015 6:08 pm

He's not correct.