Update on CIBC Mellon Withholding for 305(c)
CIBC Mellon had previously announced its intention to begin withholding during 2016. Please refer to Straight Talk dated June 28, 2016. During 2016, CIBC Mellon and BNY Mellon have continued to evaluate their approach to withholding and reporting on deemed dividends under IRC section 305(c).
As the proposed regulations have not being issued in final form, and discussion among industry participants concerning implementation of the proposed regulations continues, CIBC Mellon and BNY Mellon did not withhold for the 2016 tax year.
CIBC Mellon has been informed by BNY Mellon that during the next few weeks, BNY Mellon will make a determination of its approach to 305(c) for the 2016 tax year. If BNY Mellon determines that it will withhold, the withholding will be done at one time in February, and clients will be notified prior to the amount being debited to their accounts.
For a brief overview of 871(m) and 305(c), watch this video featuring Simon Lee.
Resources and links:
- Internal Revenue Service (IRS) website for additional details on the proposed 305(c) regulations
- IRS information on 871(m)
- IRS Qualified Intermediary agreement
- CIBC Mellon’s June 2016 paper on regulatory changes
Consult your legal, compliance or tax advisors for specific guidance about how these instruments may impact your organization.
In This Edition
- BNY Mellon Releases its Quarterly Global Network Report
- IIROC Issues a Report on its Compliance Priorities
- Bank of Canada Interest Rate Announcement and Monetary Policy Report
BNY Mellon Releases its Quarterly Global Network Report
The fourth quarter 2016 quarterly report on the status of BNY Mellon's global network is now available.
This report is a summary of BNY Mellon's global subcustody network across 100 markets, including market-specific details about its subcustodian in each local market. The report includes details about market disruptions, subcustodian credit ratings, as well as any recent subcustodian changes.
To obtain a copy of the full report, or to receive it automatically each quarter, please contact your CIBC Mellon Service Director or Account Manager.
IIROC Issues a Report on its Compliance Priorities
The Investment Industry Regulator of Canada (IIROC) recently issued its annual Compliance Priorities Report for the 2016-2017 term. In its report, IIROC outlines its key compliance and registration priorities for this year.
According to IIROC, its priorities originate from new risks and trends, the outcomes of reviews and surveys, and incorporates concerns regarding ongoing or significant examination deficiencies. Its goal with the report is to help IIROC-regulated firms strengthen their compliance, supervision, and risk management practices.
For more information, see IIROC’s news release.
Bank of Canada Interest Rate Announcement and Monetary Policy Report
On Wednesday, January 18 at 10 a.m. ET, the Bank of Canada (BoC) will announce its decision on the target for the overnight rate. A press release will provide a brief explanation of its decision.
The next full update of the BoC's outlook for inflation and growth in the Canadian economy, and its assessment of risks, will be published in its Monetary Policy Report – to be released the same day.
For more information, view the central bank's media advisory.