Canada Banks Tally Their Tax-Compliance Tab
A U.S. law aimed at cracking down on tax evasion by expatriates has collectively cost Canada’s five biggest banks about 750 million Canadian dollars (US$693.5 million) in initial compliance expenses.
The Foreign Account Tax Compliance Act, or FATCA, which took effect July 1, has banks around the globe working to meet the requirements of legislation that many countries have complained seeks to extend Washington’s reach beyond U.S. borders.
An estimated one million people with U.S. citizenship live in Canada, making it home to one of the largest populations of Americans living aboard. Senior bank executives have alerted the federal government in Ottawa to the cost estimate to highlight the tally being shouldered by major Canadian banks.
Although the price tag varies by bank, it is estimated that some Canadian banks spent C$150 million to meet the July 1 deadline.
Canadian banks say they also face continuing compliance costs.
There is no comprehensive estimate for the amount banks around the world will spend to adhere to FATCA requirements.
Canadian banks aren’t publicly disclosing their compliance costs because they aren’t expected to be material to overall financial results. The costs will be lumped into another category such as noninterest expense, potentially over several quarters.
Original Story at The Walt Street Journal