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  1. @Simon
    My unofficial “I haven’t reviewed every last detail of your situation and this is not tax advice to you” 🙂 take on this: It sounds like you probably do not need to report the PFICs in the RRSP, because you have never previously reported income from the account and so you fall under the new IRS guidance that allows the RRSP to be tax-deferred.

  2. Thanks Debra,
    I did get Annual Info Statements from the fund for my RRSP account. And the documentation clearly states that it is QEF qualified. Starting in 2013 the fund started making income distributions which were automatically reinvested into the fund as new shares. However, I have never sold any shares and taken any money out of the RRSP account. So I have never reported any income from the account.

    In my case:
    1) With the PFIC in my RRSP Account, do I still need to make the QEF election and make a purging election?
    2) Do I need to make annual QEF tax payments in the future or just in the years I sell shares out of the RRSP account?

    Thank you much for your insight.

  3. @Simon the QEF election can apply to a mutual fund if that fund provides the investor with the PFIC Annual Information Statement. Without that statement, no QEF election can be made. Most funds do not provide this to the investors, however. Regarding RRSPs, under the recent IRS guidance you typically would not have to report income from the underlying investments of this type of account. There can be exceptions, however. If you are required to report income from the account (I believe this could be the case if you had previously been reporting income from it before the new IRS guidance came out), and if the fund provides you with the necessary statement, you should be able to make the QEF election. However, be cautious — if you’ve owned the mutual fund for years before making a QEF election, you will need to make a purging election simultaneously with making the QEF election or your PFIC will be taxed both under Section 1291 AND the QEF rules.

  4. Hi Debra, Thank you for explaining the QEF election in simple laymen language.

    Does the QEF election also apply to an investment in a PFIC mutual fund? And does this also apply to an investment in a PFIC mutual fund held in a Canadian RRSP?

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.