TD Canadian T-Bill and Form 8621
Moderator: Mark T Serbinski CA CPA
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TD Canadian T-Bill and Form 8621
Thank you in advance for your assistance. I am a married Canadian citizen and my entire family immigrated to the US in 2013. For 2013, I am filing a dual-status MFS return because it is more advantageous than filing a full-year joint return (I derived this after crunching numbers based on wages/dividends earned and RRSP/401k contributed in the two countries).
In Canada, I still own the TD Canadian T-Bill Fund and am assuming that I need to fill out Form 8621. I plan to sell the holdings soon and move the money to the US so that I will only have to report this for 2014 and never again!
The mutual fund has a unit value of $10.00 and pays out monthly interest. The interest payments are re-invested in additional units at the same price of $10.00.
Please answer the following questions I have about the form.
Part II Elections:
1) Do I need to select an option in this part?
2) If yes, would you recommend QEF or Mark to Market or something else? This also impacts what I would fill out in line 5 of Part II. I suspect TD doesn't provide any documentation which would allow me to choose QEF.
3) Since I plan to sell in 2014, what option would I choose when I file the same form next year?
Part I of the form
Line 2 - Since the additional units are purchased on various dates, do I need to attach a statement or can I simply state "Various"?
Line 5 - I believe what I choose in Part II will drive the choice for this.
Top section of the form.
1) Shareholder tax year - Use calendar year or enter actual dates of residence starting in the middle of 2013?
2) Name of PFIC - Use "TD Canadian T-Bill Fund" or "TD Asset Management Inc."?
3) Address - That of the branch where I opened the account or the TD Asset Management Inc.'s main office?
4) Employer identification number - Leave this blank since I am an Individual?
5) Reference ID number - Do I create this myself as long as it is a unique alphanumeric value?
In Canada, I still own the TD Canadian T-Bill Fund and am assuming that I need to fill out Form 8621. I plan to sell the holdings soon and move the money to the US so that I will only have to report this for 2014 and never again!
The mutual fund has a unit value of $10.00 and pays out monthly interest. The interest payments are re-invested in additional units at the same price of $10.00.
Please answer the following questions I have about the form.
Part II Elections:
1) Do I need to select an option in this part?
2) If yes, would you recommend QEF or Mark to Market or something else? This also impacts what I would fill out in line 5 of Part II. I suspect TD doesn't provide any documentation which would allow me to choose QEF.
3) Since I plan to sell in 2014, what option would I choose when I file the same form next year?
Part I of the form
Line 2 - Since the additional units are purchased on various dates, do I need to attach a statement or can I simply state "Various"?
Line 5 - I believe what I choose in Part II will drive the choice for this.
Top section of the form.
1) Shareholder tax year - Use calendar year or enter actual dates of residence starting in the middle of 2013?
2) Name of PFIC - Use "TD Canadian T-Bill Fund" or "TD Asset Management Inc."?
3) Address - That of the branch where I opened the account or the TD Asset Management Inc.'s main office?
4) Employer identification number - Leave this blank since I am an Individual?
5) Reference ID number - Do I create this myself as long as it is a unique alphanumeric value?
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Yes nelsona, I did use the 2555 for my calculations. I received large dividends in Canada (almost equal to my wages there) and maxed out both RRSP and 401k in 2013. As a result, my foreign income tax credit was not that high. Even after including the 1099-T for my son, I ended up ahead filing dual-status MFS.
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- Joined: Sun Feb 16, 2014 1:01 am
Hi nakubo,
Regarding the 8621 filing - there are only likely 2/3 "elections" that you can make - I will assume the T-bill mutual fund won't give you a PFIC statement. The only Canadian mutual funds that I know of that provide PFIC statements are:
1. Dimensional Fund Adisors
2. Fidelity Investments
3. Mackenzie financial mutual funds.
4. And recently, some CIBC mutual funds.
-If you can get a PFIC statement, then you can make a "QEF" election.
The good news is that a T-bill fund likely will only ever produce interest income and very little capital appreciation. This means that if the net asset value is always $10 - like in the case of many money market funds, you can make a "mark-to-market" election and have very little "mark to market" gain. I will warn you though - even if each unit of your mutual fund is always $10 Canadian, you will get some artificial gains due to the US to CAD conversion.
There are only a few bizarre cases where you would be better off not making the "mark-to-market" election, so I'd say chose election C "mark-to-market".
You still need to report the interest income "distributions" on schedule B of your return.
I hope this is helpful.
Regarding the 8621 filing - there are only likely 2/3 "elections" that you can make - I will assume the T-bill mutual fund won't give you a PFIC statement. The only Canadian mutual funds that I know of that provide PFIC statements are:
1. Dimensional Fund Adisors
2. Fidelity Investments
3. Mackenzie financial mutual funds.
4. And recently, some CIBC mutual funds.
-If you can get a PFIC statement, then you can make a "QEF" election.
The good news is that a T-bill fund likely will only ever produce interest income and very little capital appreciation. This means that if the net asset value is always $10 - like in the case of many money market funds, you can make a "mark-to-market" election and have very little "mark to market" gain. I will warn you though - even if each unit of your mutual fund is always $10 Canadian, you will get some artificial gains due to the US to CAD conversion.
There are only a few bizarre cases where you would be better off not making the "mark-to-market" election, so I'd say chose election C "mark-to-market".
You still need to report the interest income "distributions" on schedule B of your return.
I hope this is helpful.
Hi nakubo,
Regarding your other questions:
Part II: elections - covered this - TD won't give you PFIC statements, so choose Mark to market.
Top of form: You don't need to get an EIN for TD Asset Management - just fill in the "reference ID" and use it consistently in 2013 and 2014.
The name of the PFIC is "TD Asset Management". The "class of shares" is the T-bill fund name.
I'm not sure was to put for the date shares were acquired. I'd write "various" or "biweekly" or give the first date of a share purchase and/or reinvested dividend.
As far as I know, the shareholder tax year will always be your tax year (2013)
Regarding your other questions:
Part II: elections - covered this - TD won't give you PFIC statements, so choose Mark to market.
Top of form: You don't need to get an EIN for TD Asset Management - just fill in the "reference ID" and use it consistently in 2013 and 2014.
The name of the PFIC is "TD Asset Management". The "class of shares" is the T-bill fund name.
I'm not sure was to put for the date shares were acquired. I'd write "various" or "biweekly" or give the first date of a share purchase and/or reinvested dividend.
As far as I know, the shareholder tax year will always be your tax year (2013)
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- Posts: 32
- Joined: Sun Feb 16, 2014 1:01 am
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- Posts: 32
- Joined: Sun Feb 16, 2014 1:01 am
Sorry, I have a few more questions.
When I fill the form for 2013:
1) Part I line 5: Do I select checkbox "c" and enter 0 as the amount?
2) I assume that I should fill out lines 10 (FMV, Adjusted Basis, Difference), 11 ($0), 12 ($0) in Part IV.
When I fill the form for 2014 (I will sell these holdings soon):
1) Do I still make the same election ("C") in Part II?
2) I assume that I should fill out all lines in Part IV.
When I fill the form for 2013:
1) Part I line 5: Do I select checkbox "c" and enter 0 as the amount?
2) I assume that I should fill out lines 10 (FMV, Adjusted Basis, Difference), 11 ($0), 12 ($0) in Part IV.
When I fill the form for 2014 (I will sell these holdings soon):
1) Do I still make the same election ("C") in Part II?
2) I assume that I should fill out all lines in Part IV.
Hi nakubo,
No problem - for your questions:
1. Part 1, line 5. correct. Chose C, enter $0. This is always true for the 1st year of a mark to market election. The amount here is the total gain - loss reported from previous years.
2. You're correct - since you haven't sold any shares in 2013.
In 2014 - you'll sell the shares:
1. Yes - you must make the same election. Once you make a mark-to-market election for a fund, you must keep making the election.
2. Correct, fill out all lines.
Cheers,
MGeorge.
No problem - for your questions:
1. Part 1, line 5. correct. Chose C, enter $0. This is always true for the 1st year of a mark to market election. The amount here is the total gain - loss reported from previous years.
2. You're correct - since you haven't sold any shares in 2013.
In 2014 - you'll sell the shares:
1. Yes - you must make the same election. Once you make a mark-to-market election for a fund, you must keep making the election.
2. Correct, fill out all lines.
Cheers,
MGeorge.
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