Thank you to KalC, who pointed out in a commentary 14 February that the draft FATCA regulations seem to include an exemption for pensions and related assets.
What is needed, I think, is expert opinion on the meaning of this section, which begins at p. 286. When I search the internet for interpretation, I only find sources like Deloitte & Touche, which are addressing their clients needs, chiefly business.
I have written to Barrie McKenna at the Globe & Mail, hoping that he will update us. He can get qualified opinion, and that would be very helpful. We need to know whether all pensions are exempted, both defined benefit and defined contribution plans, RRSPs, RESPs, etc. It looks like they are all exempted, but I am not a lawyer or tax expert.
@Northern Shrike A permalink to KalC’s comment would be a good thing.
I have an RRSP, as I’m sure is true of others, over the $50,000. So therefore, I expect our banks to tattle on us to the United States. Then the Master Plan of Mordor is in full swing.
The US doesn’t need to exempt retirement accounts. What our government needs to do is to tell the Yanks where they can put their FATCA.
@ above
I don’t believe that RRSP’s, RRIF’s are exempt. When reading the draft regulations, I definitely saw pensions that had “employer contributions”. Indicated to me that only “employer sponsered” pensions would be exempt.
I know that Americans in France (and I suspect that in UK and Australia) don´t even have to declare their pensions from their work there. This was in an AARO report months ago.
Tiger Seems reasonably clear to me BUT I’m not a lawyer and I don’t read Mordish. N.B. These appear to relate to accounts that the FFI must report as opposed to accounts that the individual should report.
(2) Exceptions–(i) Certain savings accounts–(A) Retirement and pension accounts. A financial account does not include an account that satisfies the conditions of paragraph (b)(2)(i)(A)(1) or (2) of this section.
(1) The account is held by a retirement or pension fund that meets the requirements of paragraph (f)(2)(ii) of this section.
(2) The account is subject to government regulation as a personal retirement account or is registered or regulated as an account for the provision of retirement or pension benefits under the laws of the country in which the FFI that maintains the account is established or in which it operates, and meets the following requirements–
(i) The account is tax-favored with regard to the jurisdiction in which the account is maintained;
(ii) All of the contributions to the account are employer, government, or employee contributions that are limited by reference to earned income under the law of the jurisdiction in which the account is maintained; and
(iii) Annual contributions (other than transfers from other accounts described in this paragraph (b)(2)(i)(A) or plans described in paragraph (f)(2)(ii) of this section or §1.1471-6(f)) are limited to $50,000 or less, and limits or penalties apply by law of the jurisdiction in which the account is maintained to withdrawals made before reaching a specified retirement age and to annual contributions exceeding $50,000 (other than transfers from other accounts described in this paragraph (b)(2)(i)(A) or plans described in paragraph (f)(2)(ii) of this section or §1.1471-6(f)).
(B) Non-retirement savings accounts. A financial account does not include an account that is tax-favored with regard to the jurisdiction in which the account is maintained, subject to government regulation as a savings vehicle for purposes other than for retirement, and the following conditions are also satisfied—
(1) Contributions to such account are limited by reference to earned income;
(2) Annual contributions are limited to $50,000 or less under the law of the jurisdiction in which the account is maintained;
(3) Limits or penalties apply on withdrawals made before specific criteria are met under the law of the jurisdiction in which the account is maintained; and
(4) Limits or penalties apply by law of the jurisdiction in which the account is maintained to contributions exceeding the limit described in paragraph (b)(2)(i)(B)(2) of this section.
@KalC Yes, I have seen this section too. I would like someone who is expert run through the various kinds of savings/pension accounts and determine exactly what does and what does not fall under the exemption. What, for example, is a “retirement fund” (as compared with a pension fund)? There are other details too, as well as a lot of cross-referencing, making it exceedingly easy to misinterprete.
The definition in the regs. of retirement accounts fits canadian RSPs exactly
I sent a note to Barrie McKenna of the Globe & Mail, who has covered this issue more than anyone else in Canada, to my knowledge.
He consulted his sources, and what he was able to come up with was that the situation is uncertain, that registered products appear to be excluded, but it won’t be clear until the final regulations are in place.
Here is an additional unexplored angle of the pension issue, re pension plans that are (partly or completely mandated and/or administered by some level of Canadian government – ex. Teachers, OMERS, Federal Public Service Pension Plan)
Teachers has made submissions against FATCA;
http://bsmlegal.com/fatca-comments.asp Title: [TEXT OF THE FATCA COMMENT LETTER SUBMITTED BY ONTARIO TEACHERS’ PENSION PLAN BOARD] December 23, 2011
I don’t know what OMERS and the Federal Public Service Pension Plan has done, or how they would handle a demand from the IRS to withold and remit 30% penalties from their USCanadian dual citizen plan members.
I still don’t understand how the IRS could force this type of member owned and Canadian government mandated plan to disclose US members, and to withhold 30% penalties and remit to the IRS. The federal government plan for federal civil servants is an even clearer case because the plan members MUST be Canadian citizens (even if also duals), and it is overseen by a federal minister of Canada. See my more detailed post:
on March 4, 2012 at 6:52 pm “Re Class Action suits”:
“@all, what about investigating the case of FATCA compliance by large Canadian pension plans that have a special relationships (ex. government sponsorship, government contributor and administrator etc.) with federal and provincial, (or municipal governments)?…”
Carl Levin in his comment letter is demanding the IRS make Ontario Teachers subject to direct US audit. He wants IRS to be able to go Toronto and in person search all of Ontario Teachers records to look for US Persons. This is a crazy
Ok so now we know this isn’t about finding US resident tax evaders at all. It’s about stealing tax dollars from other countries. A teacher in Canada owes taxes only to Canada. We have a tax treaty to prevent double taxation.
This is a tax war plain and simple. They want to steal from the government of Canada since a person can’t possibly pay taxes on the same income to two governments.
Carl Levin is obviously a criminal disguised as a politician. Since the United States is clearly at war with the entire world and engaging in the world’s biggest bank robbery, I think it’s time the world formed a joint strategy to push the US back to where they belong, inside their own borders.
Here is what the Canadian Bankers Association told the US many months ago. What I have been saying all along:
These measures are driven in part by requirements set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, and, in the case of banks, supplemented by ID requirements in Access to Basic Banking Services Regulations. Attached are guidelines on compliance with federal identification requirements (see page 26 for details on ID requirements) and a copy of the Access to Basic Banking Services Regulations. No present law in Canada requires banks to ask for proof of citizenship with the result that customers could not be compelled to provide this information. Therefore, exceptionally rigid requirements for documentation of citizenship at the time of account opening will likely result in one of two outcomes — either FFIs will not be able to meet the terms of the FFI agreement or they will be saddled with a very large number of recalcitrant account holders. Neither outcome is in the interest of the FFI or the U.S. government.
You know this double taxation theme seems to run throughout the Democratic party. Obama is talking about a minimum tax on corporations’ foreign earnings, this is in effect a double tax. No business can endure that.
If Canada proposed such a thing it would be the death of business. Companies would simply shut down and start new in another country where the government was sane.
I wonder how many US headquartered companies are thinking about packing up and just leaving if the Democrats are reelected.
With Canada’s very competitive tax rates for business, it amazes me that the Democrats are constantly attacking US businesses. Do they really think these companies have no options?
@Tim: You’re right–This is crazy. Nothing about this has been sane from the beginning.
Carl Levin vs. Ontario Teachers. My bet is on the teachers coming out the winners in that battle. Of course, Levin would then want to tax my winnings–which are tax free in Canada.
Do you have a copy of Levin’s actual letter which you could post here?
Almost every type of account that I have in Brazil and outside of Brazil asks me for my citizenship, and I have seen “some” applications that ask for place of birth. But there is no way for them to check this, and you could write Addis Ababba, Ethiopia if you want to.
The best thing for companies to do is to reject US citizens altogether. It really sucks for someone like the me, but the US is too difficult to deal with. For me, this has absolutely nothing to do with bank secrecy. The pertinent authorities where I live already have all of my bank account information here. The US has no business in my life. They give me nothing.
@OMG – most smart companies already do that. It amazes me how a company goes offshore and then keeps on getting US Government contracts. I can’t wait till I renounce and I don’t have to give that place a thought anymore.