Last week, Brett York, an attorney adviser in the Treasury Office of International Tax Counsel confirmed that the U.S. Treasury is willing to accept Canada's recent guidance that only Canadian financial institutions that are “listed financial institutions” for the purposes of Part XVIII of the Income Tax Act would be considered investment entities under the IGA. As we discussed earlier this year, the Canada Revenue Agency's guidance for Canadian entities took effect on July 1.

Under the wording of the IGA, the definition of “investment entity” is to be interpreted in a manner consistent with the definition of “financial institution” in the recommendations of Canada's Financial Action Task Force, with the result that  most personal investment companies and trusts will not  be considered  to be financial institutions required to report U.S.-owned accounts to the Internal Revenue Service under FATCA.