Foreign Account Tax Compliance Act (FATCA) Glossary Terms

                                          

Beneficial Ownershow/hide

Generally, the person/entity that has beneficial ownership of assets or the beneficial owner to income.

Financial Accountshow/hide

A Financial Account is an account maintained by a Financial Institution and includes: Depository Accounts; Custodial Accounts; Equity and debt interest in certain Investment Entities; Cash Value Insurance Contracts; and Annuity Contracts.

Foreign Financial Institution (FFI)show/hide

Generally, any non-US financial institution that includes, but is not limited to an organisation that:

  • Accepts deposits in the ordinary course of a banking or similar business (depository institution);
  • Holds, as a substantial portion of its business, financial assets as a custodial institution;
  • Engages or being engaged primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, or any interest in such products;
  • Conducts certain business as an insurance company.

Note: FFIs may also refer to certain holding companies and treasury centres in non-intergovernmental agreement (IGA) jurisdictions.

Intergovernmental Agreement (IGA)show/hide

A bilateral agreement signed between the US government and a foreign government regarding the implementation of FATCA. Broadly, these IGAs are categorised as either Model 1 or Model 2. Foreign Financial Institutions (FFIs) in Model 1 jurisdictions are required to report to the local tax authorities who in turn report to the US IRS whereas FFIs in Model 2 jurisdictions are required to report FFIs directly to the United States (US) Internal Revenue Service (IRS).

Internal Revenue Service (IRS)show/hide

The IRS is the tax authority of the United States (US). They are the final recipients of all reporting which Financial Institutions provide as a result of FATCA.

Non-Participating Foreign Financial Institution (NPFFI)show/hide

A Foreign Financial Institution (FFI) that does not comply with the FATCA provisions. This category may also apply to entity clients that do not participate with the FATCA regulations, including not cooperating with requests for forms.

Recalcitrant Account Holdershow/hide

An account holder may become recalcitrant if they do not provide the documentation and/or information as required to confirm their FATCA status.

US Citizenshow/hide

A United States (US) Citizen can be defined as the following:

  • A person who was born in the US (provided they haven’t renounced their US citizenship);
  • A person who holds a US passport;
  • A person who is a naturalized citizen of the US.
US Personshow/hide

A United States (US) Person can be defined as the following:

  1. A citizen or resident of the United States;
  2. A domestic partnership;
  3. A domestic corporation;
  4. Any estate other than a foreign estate;
  5. Any trust if:
    • A court within the United States is able to exercise primary supervision over the administration of the trust, and
    • One or more United States persons have the authority to control all substantial decisions of the trust;
  6. Any other person that is not a foreign person.