Which funds are PFIC?

Which funds are PFIC?

Examples of securities that are classified as PFICs are Canadian mutual funds, Canadian pooled funds, Canadian Exchange Traded Funds (ETFs) and many Canadian income trusts or real estate investment trusts (REITs).

Is a bond fund a PFIC?

Funds are usually PFICs Mutual funds, exchange traded funds (ETFs), bond funds, currency tracking funds, and similar assets are all vehicles that make various investments and pay out a portion of the returns to you. Foreign funds are usually PFICs.

Are Indian mutual funds PFIC?

While there are some exceptions to taxation of certain dividends (mainly corporate-to-corporate issuances), unfortunately there is no default exception for Indian Mutual Funds. And, like almost all mutual funds, an Indian Mutual Fund will fall into the PFIC category…which further complicates the matter.

What is considered a foreign mutual fund?

A foreign investment fund or corporation is considered a PFIC if either at least 75% of its gross income is passive income (i.e. from investments), or if at least 50% of its assets are held to produce passive income.


All registered plan accounts, including Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Registered Education Savings Plans (RESPs) and Tax-Free Savings Accounts (TFSAs), are exempt from these reporting requirements.

How is PFIC income taxed?

A shareholder of a PFIC is by default subject to the Sec. All capital gains from the sale of PFIC shares are treated as ordinary income for federal income tax purposes and thus are not taxed at preferential long-term capital gain rates (Sec. 1291(a)(1)(B)).

Are mutual funds PFICs?

A common question we hear is, “how do I identify a PFIC?” A key point to understand is that mutual funds from U.S. companies with international investments—like Vanguard, for example—are generally not considered PFICs.

Are all foreign mutual funds PFIC?

The IRS strictly enforces PFIC Rules. Each of Your funds is considered to be a PFIC (Passive Foreign Investment Company). That is because the IRS hates Mutual Funds from overseas — so much so, that foreign mutual funds have been designated as PFICs for tax reporting purposes, which is very bad for tax purposes.

Are all mutual funds PFIC?

Do I report TFSA on FBAR?

Where a TFSA is a financial account, in addition to being taxed annually on the income, it must generally be included in your FBAR filing. When a TFSA is set up legally as a trust, if the IRS views the TFSA as a foreign trust with a U.S. owner, the account owner may be subject to additional reporting requirements.

Do I need to report TFSA on FBAR?

If you have invested in one or more TFSAs, you generally have to report the TFSA on your U.S. taxes – usually on a form 8938 and accompanying FBAR — and you do pay tax on the growth (even if it is non-distributed).

What are foreign mutual funds?

A foreign fund is a fund that invests in companies outside the investor’s country of residence. Foreign funds can be mutual funds, closed-end funds or exchange-traded funds. They are also known as international funds.

What is PFIC income?

A PFIC is a non-U.S. corporation that has at least 75% of its gross income considered passive income or at least 50% of the company’s assets are investments that produce passive income. Passive income generally includes dividends, interest, rent, royalties and capital gains from the disposition of securities. Canadian mutual fund…

What is a PFIC statement?

The PFIC Annual Information Statement is a statement of the PFIC, signed by the PFIC or an authorized representative of the PFIC, that contains the following information and representations[.] The Regulations provide a detailed list of the information that must be present on the PFIC Annual Information Statement.

What is PFIC reporting?

PFIC Reporting (Passive Foreign Investment Company) The US tax code refers to any kind of corporate mutual fund or investment company outside the U.S. as a passive foreign investment company or a PFIC. The IRS rules for Passive Foreign Investment Companies are almost unmatched in complexity and in their rigid yet confusing elements.