[url]http://www.skltax.com/tfsa-us-tax-classification/[/url]
See the article at the link.
From the article:
A TFSA is generally assumed – incorrectly – to be a foreign trust for US tax purposes that requires the filing of a form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, and a form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner. Arguably, a TFSA is not an entity separate from its owner for US federal tax purposes and no additional reporting is necessary. Even if a TFSA is a separate entity, it should be treated as a disregarded entity for US tax purposes and a form 8858 filed
TFSA is NOT a foreign trust
Moderator: Mark T Serbinski CA CPA
The title of your post unfortunately implies that the TFSA hereafter need not be treated as a trust just because Max Reed says so.
Actually, it is an excellent article when it comes to arguing why the TFSA shouldn't be treated as a trust. In fact, it sounds very much like what a lawyer might put before the Tax Court on the matter.
There are other similar subjects that I would like to argue before the Tax Court if I had the time and money to do so. One would be the constitutionality of taxing an American RESP subscriber/owner/grantor on the CESG (Canadian government grant) that is allocated to the beneficiary Canadian student and which would revert to the Canadian gov't if the American subscriber dissolved the RESP.
IMO, until the IRS issues a definitive statement/letter on the TFSA matter: As with some of these other rather vague situations, if one chooses 'the TFSA is not a trust' path, then one might receive another kind of letter in the mail some time in the future. It comes down to one's capacity to deal with that possibility.
All that said, it still is a good article to know about.
Actually, it is an excellent article when it comes to arguing why the TFSA shouldn't be treated as a trust. In fact, it sounds very much like what a lawyer might put before the Tax Court on the matter.
There are other similar subjects that I would like to argue before the Tax Court if I had the time and money to do so. One would be the constitutionality of taxing an American RESP subscriber/owner/grantor on the CESG (Canadian government grant) that is allocated to the beneficiary Canadian student and which would revert to the Canadian gov't if the American subscriber dissolved the RESP.
IMO, until the IRS issues a definitive statement/letter on the TFSA matter: As with some of these other rather vague situations, if one chooses 'the TFSA is not a trust' path, then one might receive another kind of letter in the mail some time in the future. It comes down to one's capacity to deal with that possibility.
All that said, it still is a good article to know about.
Hi marcharry,
Thanks for pointing me to this - interesting article. I read through some articles that Max Reed wrote about the possibility that Canadian mutual funds could elect to be considered partnerships instead of corporations. This would render them not PFICs. I'd love to see that happen!
Cheers.
Thanks for pointing me to this - interesting article. I read through some articles that Max Reed wrote about the possibility that Canadian mutual funds could elect to be considered partnerships instead of corporations. This would render them not PFICs. I'd love to see that happen!
Cheers.
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MGeorge is neither an accounting nor taxation professional.
MGeorge is neither an accounting nor taxation professional.