Foreign Account Tax Compliance Act of 2009

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JohnSt
Posts: 70
Joined: Wed Mar 07, 2007 2:33 pm

Foreign Account Tax Compliance Act of 2009

Post by JohnSt »

Some significant IRS tax changes are being introduced in this act:
http://www.financialtaskforce.org/2009/ ... t-of-2009/

One change could affect US citizen children who would someday benefit from RESPs. If I read correctly, if this becomes law in its present form, RESPs with US citizens as "future" beneficiaries would be reported. It's not clear if this means taxable now or just 3520 reporting. So, even if the parents or grandparents are not citizens, if the children are, it would get reported. Or at least that's my reading of it.
nelsona
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Post by nelsona »

Sounds like a reporting-only issue at this point. Your reading of it applying to grandkids of Cdns seems correct, under the 'future' events.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
JohnSt
Posts: 70
Joined: Wed Mar 07, 2007 2:33 pm

Post by JohnSt »

Though it is has no impact on the IRS, Canadian case law views most RESPs as not being formal trusts, but simply agreements between a subscriber and a promotor. As such, when an RESP owner dies, the RESP becomes part of the estate.

It's no small point. If Canadian law says it's not a trust, but American law says it is, when is a trust a trust? In terms of the law, if I bought a car and the US goverment called it a trust, would it not be a reasonable defense (in US court) to say I bought a car? (Yes, this is just a theoretical exercise.)
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