According to their website, “The Canadian Bankers Association works on behalf of 54 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada…to promote an understanding of the banking industry and its importance to Canadians.”
It is all the more disappointing to find the following information on their site, intended for us Canadian consumers (says last updated July 5).
- For a US person – “If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, your financial institution may be required to withhold a tax of 30% on any U.S. source payments that you receive and send this money to the IRS. Also, your financial institution may refuse to open an account or may be required to close existing accounts” (emphasis mine).
- For ‘non-US person’ clients, the repercussions of not providing further documentation, if requested, are, “If you choose not to provide this additional documentation upon request, at a minimum, your financial institution may be required to withhold a tax of 30% on U.S. source payments1that you receive and send this money to the IRS.”
So, a Canadian born in Scotland that has US indicia who refuses to provide documentation will have 30% US source income withheld. A Canadian born in the US who refuses to provide documentation will not only have 30% withheld, but may have their account closed? Yet, if both refuse to provide further documentation, then how the heck will a bank know where a person was born? And how is this not discrimination?
Shouldn’t this banking association be the ones reassuring us that Canada’s Access to Basic Banking Services will come into play for our protection?
Obviously not. Seems like they are quite willing to roll over and expose their tummy.
If the CBA is on board with FATCA, then it seems that the individual banks will just follow their lead. My impression is that the CBA is simply telling US born Canadians “yep, sucks to be you”.
U.S. Foreign Account Tax Compliance Act (FATCA) Information for Clients
The CBA’s stance seems to be that the banking industry is important to Canadians but not all Canadians are important to the banking industry.
Frustrating, disappointing and upsetting, but I guess not unexpected given what’s been happening in the last couple of months.
Tread carefully, Canadians! This sounds like what I and many others in Europe have been experiencing: accounts denied or closed and a general feeling of being increasingly further shut out of almost all financial services. Fight this!
Attention snowbirds: “You also may be considered a U.S. person if you spend a considerable amount of time in the U.S. on a yearly basis. For example, some Canadian ‘snowbirds’ may be considered U.S. persons for U.S. tax purposes. If you are unsure, contact your tax advisor.”
Hey Snowbirds: When you gonna figure out that you should sell that condo in the US and find something further south?
We need to remember Canada’s Bank Act prohibits banks from asking about our place of birth. It also prohibits them from closing an account with a fine of up to $200,000 for doing so unless the customer has committed a crime against the bank. Canada’s Privacy Act also prevents them from releasing information to IRS without our consent.
To date, Canadian government has not indicated they will change the law to accommodate the demands of a foreign government.
So, if the banks violate our rights, we may have cause for a lawsuit against the banks. If the government changes the law, we may have grounds for a Charter Challenge against the government.
Someone suggested if it comes to that, if we had 500 people each contribute $1,000, we would have a fund of $500,000 for legal action. Also, there is the possibility Canadian Civil Liberties Association may become involved. Plus, the Privacy Commissioner is monitoring FATCA.
I encourage others to contact CBA and let hem know what you think. Schubert and I did that a few months ago, but the more they hear from, the more seriously they may consider whether they are prepared to violate Canadian law.
I have let CBA know I have already consulted a prominent lawyer. I mentioned the lawyer by name because Tim thought it might scare the sh– out of them. I don’t know if it made a difference, but it was after that when the President of CBA made his presentation to Vancouver Board of Trade criticizing FATCA and the effect it will have on Canadian banks and Canadian customers.
@Blaze, thanks, I was wondering if it would be at all worth while to contact CBA, but I think I will, based upon what you’ve said. And personally, I am very, very afraid that our gov’t will, indeed, change Canada’s law to suit the US. I hope I’m wrong. When I looked into what would be considered a crime against a bank, in the Act, it most definitely did not say it was a crime against the bank to not fill out forms intended for the IRS….
Blaze, who did you contact? Someone more influential than the manager of media relations posted on their website?
@Outraged, Others: I am going to try to post a letter which was sent over a year ago from a Vice-President of TD to DOT and IRS. Although this is over a year old, the information is still relevant. This is where I learned the fine for closing an account can be up to $200,000 and that the bank would be required to reopen the account.
I don’t know if I’m doing this correctly, so if the link doesn’t work, Petros, could you or someone else correct it?.
:Letter from TD to DOT and IRS: us_tax_7789_1_042611.pdf
Try this:
http://www.bakerlaw.com/files/Uploads/Documents/FATCA/Comment%20Letters/TD_Bank_Group_04042011.pdf
@Blaze
As someone more involved in this put it to me the Canadian Bankers Association basically has their thunb up their *** on this totally unsure really at all what to do other than looking at others such as the US Treasury, US Congress, Ottawa, and even the Brock Society to do something anything. Several people have indicated to me if the Canadian Bankers Association flew down to Washington with alternative proposal to fix FATCA but continue to solve the underlying problem FATCA was supposed to fix(US residents with offshore accounts) as perceived by the US political class they WOULD get a hearing on Capital Hill.
@Blaze, couldn’t get your link to work, but used it to find another one. Let me know if this is not the letter you’re referring to, but I’m sure it is.
@Tim: Isn’t that already happening between Canada and US? Isn’t Canada already providing info to US on their residents who have money invested in Canada. Isn’t there also an agreement US reports to Canada on Canadian residents who are earning income on their money in US? Isn’t that what makes Canada-US tax treaty unique because US does not report to other countries on their residents. (Does that sound like an international tax haven?!?)
If CBA is looking to others for the answers, it’s important we put the ball right back in their court and let them know we are very aware of our legal rights and expect our banks to adhere to them.
Unfortunately, my attempted link to the TD letter didn’t work. Apparently, it is different to link to a pdf than it is to link to a website. Can anyone advise me how to do that–or correct my error? Thanks.
@Outraged: I didn’t see a link to the letter in your post.
My gut reaction is “Actually, I was born on the planet Saturn, but you’re most welcome to send 30% of myUS source income to United States because I don’t have any US source income and I’m never going to anyway.”
On a more serious note, I oppose implementation of any foreign country’s law inCanada , and the thought of a foreign country overriding any of our essential rights, within our own country, is repugnant. Period. Full stop. End of sentence.
I wonder sometimes if maybe one reason Canadians take our rights very seriously is because so many of us lived through the development of the Charter of Rights, when it was on the nightly news and discussed at the water cooler in the years leading up to its proclamation in 1982 … for example, no living American was around for the development of their constitution, so it’s more like history, whereas for us it’s more like current events.
Sorry, Blaze, I put the link in your comment, under Try this: Maybe I should do it a different way?
@Pacifica, I was too self involved as a teenager to remember any discussions about it, but it’s very important to me, too. Or, perhaps, it’s just that I simply absorbed it without even being aware of it at the time. I am just darn grateful it’s there, I tell you!
And yes, since I have no US income I’m not at all worried about the 30% withholding. What I am worried about is banks being allowed to close my accounts because I am a ‘recalcitrant account holder’.
Repugnant – that’s a perfect word for this!
@Outraged. Yes, I, too, think that even if one was younger, or not born yet, or not here yet, it occurred recently enough and permeated society so much at that time, that that effect remains. Because of the news coverage, it sure was pretty amazing who’d end up basically discussing constitutional law in casual conversation at the water cooler … or pub.
Likewise, it’s not the 30% withholding that would bother me at all as I have no US income, but having an account closed would. And on principle, I don’t think place of birth is a question that any person in this country should have to answer. If I could just say, “None of your business, send them 30% [of 0]” I’d be fine with that in a practical sense. But, also like you and others, I feel the principle of them even asking place of birth is … I gotta use that word again … repugnant. We’re a sovereign country, for pete’s sake.
*sent to:
rswiednicki@cba.ca
cced to my NDP MP.
Media Relations, Canadian Bankers Association
Please note that your information on your website
http://www.cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients
may constitute a violation of Canadian law. Canada’s Bank Act prohibits banks from asking about our place of birth. It also prohibits them from closing an account with a fine of up to $200,000 for doing so unless the customer has committed a crime against the bank. Canada’s Privacy Act also prevents them from releasing information to IRS without our consent.
To date, Canadian government has not indicated they will change the law to accommodate the demands of a foreign government.
So, if the banks violate our rights, we may have cause for a lawsuit against the banks. If the government changes the law, we may have grounds for a Charter Challenge against the government.
Thank you!
@Outraged: Yes, your link in my comment works. That is the letter I tired to link to.
@Pacifica: Agree wholeheartedly.
@Joe: Your note to CBA captures it. The more of us they hear from, the better (including those who are residents of Canada, but not yet citizens. You, too, have rights here.).
Sent mine:
Dear Ms. Swiednicki,
Are you aware that the information that you are providing on your FATCA information page for banking clients may, in fact, leave banking institutions, and potentially the CBA itself, open to potential lawsuits?
http://www.cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients
By publishing this information, and by implication, advising banks to follow the CBA guidelines, the CBA is advocating that banks violate the Canada Bank Act by asking Canadian clients where they were born. The Access to Basic Banking Services regulation does not allow for the closing of a bank account unless a person has committed a crime against the bank. The last I heard, it was certainly not illegal to refuse to provide private and personal information to a foreign government.
Are you really prepared for the flurry of lawsuits that is likely to happen if you continue down this road? Why is the CBA not standing up for the rights and the privacy of Canadian clients against a foreign government?
Your own website says, “The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada’s economy.”
Please explain how bowing down to FATCA, a foreign government’s law, benefits Canadians and Canada’s economy? To me, as a simple Canadian banking client, FATCA seems disastrous to Canada’s economy. TD Financial Group has estimated it will cost them, alone, over $500 million dollars to become compliant. How is that to the benefit of our economy, and to Canadians?
Regards
WONDERFUL!!!
Here’s my e-mail …
Dear Ms. Swiednicki,
Regarding this information on your website:
http://www.cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients
This is very disturbing to see the CBA apparently completely
capitulating to the overreaching demands of a foreign government
(FATCA). To ask for a person’s place of birth and imply that banks could
actually close an account if this personal piece of information is not
revealed is appalling. I, for one, would join in any class action
lawsuit against the CBA and/or individual banks if my rights are
violated in this manner.
It is my understanding that the Canada Bank Act prohibits banks from
asking for a person’s place of birth. Could you please tell me if this
has changed or is about to change? It would be vital information for
everyone to know if Canada’s sovereignty has been or will be breached
again.
Thank you,
@Joe & Em, united we stand! Great letters
Great letters. I’ve sent a few to those on the front lines, those who work directly with the customers. Two resulted in the Rickerby interview on Global News that I’m reposting here:
http://isaacbrocksociety.ca/2012/06/14/its-not-a-battle-financial-institutions-can-wage-shaun-rickerby-of-rickerby-wealth-group-td-waterhouse-makes-a-canada-call-to-arms-regarding-fatca-on-june-12th/
Although I agree that the CBA should be drawing a line in the sand re FATCA, I don’t see this information as an entirely bad thing because if FATCA is that freight train heading our way, it is one way of getting it on the average Canadian’s radar. From a customer relations point of view, isn’t it better to provide this kind of information than blind side their customers when it’s too late to derail FATCA? I don’t see this as an endorsement, necessarily.
I just saw this comment elsewhere… Wonder when these questions are coming to Canadian Banks. They do copy each other you know… Best practices, and they want to be certified as FATCA Compliant, so get ready.. Missing was the question, “were you born in the USA?”
Just yesterday I was at a bank in Geneva asking info on how to setup a simple checking account. It was very revealing to experience how “highly concerned” banks are of anyone who may be considered as “linked” to the USA.
Now everyone, without exception, has to answer a questionnaire the bank manager/clerck are obliged to make you fill in and sign :
– Are you a USA citizen?
– Are you a USA green card holder?
– Do you reside in the USA for more than 32 days per year?
– Have you been in the USA for more than xx days in the last 2 years?
– Do you hold bank accounts in the USA?
– Do you trade or do business in the USA?
@just me. Did the bank indicate what they will do if you are found to have not answered honestly? Or were unaware of US citizenship?
@bubblebustin…
Have no idea, just picked up from a comment from here…
http://www.sovereignman.com/expat/german-tax-authorities-raiding-homes-of-suspected-evaders/
This US person identifying questionnaire will have to be ongoing for the banks, as bank customers status’s can often and easily change! (especially under the substantial presence test for Canadians and Mexicans)
*For Blaze,
You reiterate essentially the same conditions that exist in all of the EU (save the 200k fine). This really is text-book discrimination (where nationality is concerned). While this all is terrifying, part of me is looking forward to the MASSIVE civil rights cases waiting in the wings that hopefully will be ruinous for participating banks. This may even be ruinous for the US economy where all of those “cannot be sold to U.S. person” mutual funds etc, need to be removed from the market due to discrimation. Imagine if you will, a package of bubble-gum that states “cannot be sold to an Egyptian” (etc). See how far that would get them…