# 3520 for Canadian TFSA form asks to attach trust documents?



## silverboots (4 mo ago)

trying to fill out a 3520 and 3520A substitute form for a Canadian TFSA. The form asks for trust documents, name of trustee, and US agent. I don't have any of this information/documentation and the people at the bank I spoke with don't have it either. How to complete the form? Help please.


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## Harry Moles (11 mo ago)

Are you absolutely certain you still need to do form 3520/3520A for a TFSA? Famously that form is a bit of a nightmare, but I vaguely recall hearing about a change in the rules, TFSAs no longer being considered equivalent to trusts.

There is an alternative, of course. TFSA accounts are not reported under FATCA. You could either pretend it doesn't exist, or pretend it's a regular savings account and simply declare the income as you ordinarily would. If you have mutual funds in the TFSA you'll have all the fun PFIC paperwork to deal with (or not) as well.


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## silverboots (4 mo ago)

Harry Moles said:


> Are you absolutely certain you still need to do form 3520/3520A for a TFSA? Famously that form is a bit of a nightmare, but I vaguely recall hearing about a change in the rules, TFSAs no longer being considered equivalent to trusts.
> 
> There is an alternative, of course. TFSA accounts are not reported under FATCA. You could either pretend it doesn't exist, or pretend it's a regular savings account and simply declare the income as you ordinarily would. If you have mutual funds in the TFSA you'll have all the fun PFIC paperwork to deal with (or not) as well.


Thanks for the quick response. The tax adviser is uncertain so she recommends a "protective" filing of 3520 and 3520A substitute for the TFSA. The bank in Canada is clueless when asking for trust documents. They say they don't have them.


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## Harry Moles (11 mo ago)

Of course the tax advisor is going to err on the side of caution when she can charge a good sum for filing those forms.

The bank won't have trust documents for your TFSA because a TFSA is not a trust.

Do some research on this, there is a professional opinion that 3520/3520A forms are not required for a TFSA.


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## Jca1 (Aug 7, 2019)

I'd be really wary of 'protective' filings. The best way to get a 3520/3520-A penalty is to fill out 3520/3520-A. The IRS has been handing out giant penalties for trivial errors or sometimes no error on these forms. Further, the TFSA is probably not a trust under US law as there is no fiduciary.


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## Harry Moles (11 mo ago)

Jca1 said:


> I'd be really wary of 'protective' filings. The best way to get a 3520/3520-A penalty is to fill out 3520/3520-A. The IRS has been handing out giant penalties for trivial errors or sometimes no error on these forms. Further, the TFSA is probably not a trust under US law as there is no fiduciary.


That spate of penalties for "late" 3520 forms appears to be a thing of the past, and by the accounts I'd seen the IRS recognized their error and it was possible to get the money back, though of course doing so required many letters and long waits and expensive professional assistance. But yes, the best way to avoid this problem is to not file the damn things, which seems to be the preferred option now among some tax shops at least, per my fast online search. The IRS has excluded RESP and RDSP accounts from the 3520 requirement, and they argue the TFSA is no different under the revised rules. Given that none of the registered accounts are subject to FATCA reporting, this is a reasonable strategy.


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