Canada — Related agreement (exchange of notes) 1 (signed 2019-03-20)

ARRANGEMENT BETWEEN THE COMPETENT AUTHORITY OF THE UNITED STATES AND THE
COMPETENT AUTHORITY OF CANADA
Article XXVII of the Convention Between the United States and Canada with Respect to Taxes on Income and on Capital done at Washington on September 26, 1980, as amended by the Protocols done on June 14, 1983, March 28, 1984, March 17, 1995, July 29, 1997, and September 21, 2007 ("Convention") authorizes the exchange of information for tax purposes, including on an automatic basis. The Agreement between the Government of the United States of America and the Government of Canada to Improve International Tax Compliance through Enhanced Exchange of Information under the Convention Between the United States of America and Canada with Respect to Taxes on Income and on Capital, signed on February 5, 2014 ("Agreement") provides for automatic exchange of certain financial account information.
Article XXVI of the Convention permits the Competent Authorities to address matters regarding implementation of the Convention and to resolve "any difficulties or doubts arising as to the interpretation or application of the Convention."
After consultations between the Competent Authorities, the Competent Authorities have reached this arrangement ("Arrangement" ).

1. For the purposes of this Arrangement, the following terms have the following meanings: a} The term "Covered Financial Institution with a Local Client Base" means a Non-Reporting Canadian Financial Institution that is a Financial Institution with a Local Client Base described in section lll(A) of Annex II of the Agreement, that has performed the due diligence required in section lll(A) of Annex II of the Agreement.

b) The term "Covered Local Bank" means a Non-Reporting Canadian Financial Institution that is a Local Bank described in section 111(8) of Annex II of the Agreement.

c) The term "Covered Financial Institution" means a Covered Financial Institution with a Local Client Base or a Covered Local Bank that registers with the IRS as a Reporting Canadian Financial Institution (or, with respect to a Covered Financial Institution with a Local Client Base, changes its FATCA classification in an existing registration to a Reporting Canadian Financial Institution).

d) The term "Covered Financial Account" means a Financial Account maintained before the date that a Covered Financial Institution with a Local Client Base or a Covered Local Bank becomes a Covered Financial Institution.

2. All other terms used in this Arrangement have the same meanings as in the Agreement.
3. The Competent Authorities intend that a Covered Financial Institution is not required to perform the due diligence procedures described in Annex I of the Agreement (other than those due diligence procedures already performed by a Covered Financial Institution with a Local Client Base under section lll(A) of Annex II of the Agreement) on a Covered Financial Account, unless there is a change in circumstances with respect to such Financial Account.
1 .1!j'Mc£ ~~ o2ol9
Date
4. If there is a change in circumstances with respect to a Covered Financial Account that (i) causes the Covered Financial Institution to know, or have reason to know, that the selfcertification or other documentation associated with the account is incorrect or unreliable,

(ii) with respect to a Preexisting Individual Account, results in one or more U.S. indicia described in section 11(8)(1) of Annex I of the Agreement being associated with the account, or (iii) with respect to a Preexisting Account that was not required to be reviewed, identified, or reported, causes the Preexisting Account to become a Preexisting Account required to be reviewed, identified, or reported due to an increase in the account balance or value (see sections ll(E)(2) and IV(E)(2) of Annex I of the Agreement), then the Covered Financial Institution shall redetermine the status of such Covered Financial Account in accordance with the procedures set forth in Annex I of the Agreement.
For the Competent Authority of the For the Competent Authority of
Canada
United States of America:
Commissioner, Large Business &
Director General, Legislative Policy Directorate,
International, Internal Revenue Service Legislative Policy and Regulatory Affairs
Branch, Canada Revenue Agency
2