PFIC statements for the Compass Portfolios and ATBIS Pools are now available for US persons for calendar year 2017 and can be found on www.compassportfolios.com
Who are PFIC statements for?
Advisors should be aware that there may be additional tax and reporting requirements to the IRS if a US person has invested in Canadian mutual funds. US persons include:
- US citizens
- Green card holders, and
- Individuals who meet the IRS Substantial Presence test, but do not qualify for the Closer-Connection Exception
PFIC reporting is not required for income earned under a foreign pension plan or individual retirement plan including RRSPs and RRIFs.
PFIC statements are not relevant to other investors.
Why are PFIC statements being provided?
The IRS has determined that most Canadian mutual funds, even though they are organized as trusts under Canadian law, should be classified as corporations for US tax purposes. This classification results in the investment being considered an investment in a passive foreign investment company (PFIC).
As such, US persons must file IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. The purpose of the PFIC Statements is to provide information to enable US persons to elect to treat their investments in the Compass Portfolios and / or ATBIS Pools as a qualified electing fund (“QEF”) which may be beneficial.
Before making any investment decisions, US persons should speak with a qualified, cross-border tax professional to discuss the specifics of their own situation.
The information provided in this article is a simplified general summary and is not intended to replace or serve as a substitute for professional advice. Professional tax advice should always be obtained when dealing with taxation issues as each individual’s situation is different. This information has been obtained from sources believed to be reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness.
This document and all of the content has been prepared by ATB Investment Management Inc. ("ATBIM”) which manages the Compass Portfolio Series. ATBIM and ATB Securities Inc. ("ATBSI") are wholly owned subsidiaries of ATB Financial and are licensed users of the registered trademark for ATB Investor Services. This information is subject to change and ATB Securities Inc. (Member Investment Industry Regulatory Organization of Canada and Canadian Investor Protection Fund), ATB Investment Management Inc. and ATB Insurance Advisors Inc. reserves the right to change the information without prior notice, and does not undertake to provide updated information should a change occur. ATB Financial, ATB Investment Management Inc., ATB Securities Inc. and ATB Insurance Advisors Inc. do not accept any liability whatsoever for any losses arising from the use of this document or its contents.