Most Canadian mutual fund trusts are largely off the FATCA hook

CRA has clarified that, under the new Foreign Account Tax Compliance Act rules as they have been legislatively implemented in Canada, a mutual fund trust is not responsible for verifying the FATCA status of its unitholders if the units are held in the name of an investment dealer, so that both the due diligence and CRA reporting responsibilities fall upon the dealer.  If the units are registered in the client name (i.e,, the unitholder investor), then generally the dealer has the due diligence responsibilities and reports the results to the mutual fund trust, which sends in the return to CRA – unless the dealer volunteers to do the reporting to CRA even in this situation.

Equity (or debt) interests in a financial institution also are exempted from FATCA reporting if they are "regularly traded on an established securities market," so that (not surprisingly) most exchange-traded funds are exempt.  CRA states that an interest is considered "regularly traded" if "there is a meaningful volume of trading on an ongoing basis," and that "further guidance is expected to be provided after the commentary to the Common Reporting Standard is issued by the OECD."  The term "established securities market" "includes, but is not limited to, exchanges that are ‘designated stock exchanges’ under the ITA."

Neal Armstrong.  Summaries of Guidance on enhanced financial accounts information reporting under various Part XVIII and IGA headings including s. 263(3) and s. 265(8).