The following response to the Isaac Brock Society appeared in a comment.
I am with the CBA and we have been following your discussion. We certainly understand the concerns that you have with FATCA. However, you seem to be under the impression that Canadian banks are planning to willingly go along with the FATCA requirements and this is certainly not the case. In fact, the Canadian banking industry agrees with your concerns and we have been and will continue to fight to change the extraterritorial reach of FATCA and lessen the impact it will have on Canadian banks and their customers.
We have information on our stance on FATCA on our website:
http://cba.ca/en/research-and-advocacy/47-regulatory-enviornment/598-foreign-account-tax-compliance-act–
For more than two years, the CBA and the Canadian banks have raised our concerns with the IRS and the US Treasury Department and have also done so through our membership in the International Banking Federation. We have also had discussions in Washington with IRS and US Treasury officials and Canadian Embassy officials. In May, the CBA made a presentation in Washington at public hearings before Treasury and the IRS and our president spoke out against FATCA in speeches in Calgary and Vancouver this spring. Here are the links:
http://cba.ca/contents/files/presentations/pre_20120515_irsfatca_en.pdf
Last week we also submitted an opinion piece with our concerns about FATCA to the Washington Post and we are waiting to hear back about whether it will be printed.
In Ottawa, we have raised concerns with officials from the Department of Finance, the Minister of Finance and the US Embassy. Finance Minister Jim Flaherty has supported our position and expressed his own concerns publicly and we appreciate the support from the Minister and his officials. And we are not alone in fighting this legislation. Governments and banking groups from around the world share your concerns and ours. You can find more documents here:
If banks were required to identify US persons under FATCA, they would not be doing this willingly. However, they may have no choice as FATCA is currently written because the non-compliance would have a much larger impact on more of the financial institutions’ customers. The penalty for being unable to comply with these complex rules is very severe for both banks and their clients. The penalty includes a 30 per cent withholding tax on all U.S. source income flowing to the bank and its customers, and a 30 per cent withholding tax on the gross proceeds of the sale of U.S. securities by the bank and its customers, and withholding on some portion of so-called “foreign pass-thru” payments. According to Statistics Canada, as of 2010 Canadian direct investment in the United States totalled nearly $250 billion. As outlined on our website, banks would only provide information to US authorities with a customer’s consent (http://cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients).
There is nothing in the Canadian Bank Act or the Access to Basic Banking Services (ABBS) Regulations that prohibits a bank from closing an account. The ABBS regulations give reasons why a bank can refuse to open an account for someone, but they don’t give any restrictions on closing an account. You can find information here: http://laws-lois.justice.gc.ca/eng/regulations/SOR-2003-184/page-1.html
I hope this is helpful in explaining why Canadian banks would comply, however reluctantly, with FATCA if it became necessary and why Canada’s banking industry, with the support of the federal government, will continue to fight for changes to the FATCA legislation. As your concern seems to be the requirements under FATCA, you may wish to add your voice to the growing opposition to this legislation by raising these issues with the US Treasury, the IRS and the U.S. embassy in Ottawa.
Maura Drew-Lytle
Director, Media Relations and Communications
Canadian Bankers Association
The following comments were received:
Joe SmithDear CBA
Are your member banks prepared to give up close to 1,000,000 bank customers and terminate their businesses?
@ Joe Smith
We are working hard to get changes to FATCA to lessen the impact on bank customers in Canada. While we are still hopeful that some changes may be made, the banks and other financial institutions also have to start preparing for its implementation even though they are reluctant to do so.
@Joe Smith, thanks for posting this. I just saw that I received the same email.
Joe SmithDoes anybody have updates on Credit Unions planned approaches? This could be a tremendous windfall for the cooperative movement if they pick up 1,000,000+ accounts, mortgages, loans, RRSPS and RESPS as well as tax-free accounts..
Tim@Joe Smith
While she is technically correct on the application of ABBS(re closing vs opening) effectively over a large portion of the population ABBS blocks closure. If someone was closed out legitimately one institutions they could simply go to another and demand to opened under ABBS effectively negating the point of the FATCA regs. The Washington Post part of the story is news to me and a good sign. The foreign pass through payment issue is in total violation of Canadian law under several court rulings.
Blaze@Maura: It seems you are cofirming our worst fears that there is nothing to prevent a bank from closing an account. This to me says Canadian banks may very well (even if reluctanlty) demand to know place of birth, request permission to provide information to IRS if that place of birth is in US and be prepared to close an account if that permission is not given.
Despite your protestations, this says a foreign law will take precedence over the rights of Canadian citizens and residents when push comes to shove.
Your comments are also in conflict with the following comments in a letter from a Vice-President of TD to DOT and IRS.
“If an FFI closed an account because such information was not provided, the purpose of ABBS rules would be frustrated and, in addition, the FFI would be subject to fines. Each violation of the ABBS requirements would subject the financial institution to a penalty of up to 200,000. Even if an FFI could close the account of an uncooperative account holder, an FFI could not refuse to reopen an account for such an individual if adequate identification under ABBS were again provided.”
Would you please clarify for us the following:
1. Is the information you provided correct or is the information in the letter from TD correct?
2, Under what legal authority would a bank be able to ask it’s customers where they were born or if they hold citizenship of a foreign country?
As I I told you in my e-mail, I have been in contact with a prominent Canadian lawyer. My bank can expect legal action of they ask me my place of birth or make a request to transmit private financial information to a foreign government.
You may be assured we are making our views known to government officials on both sides of the border.
In the meantime, your response is making my employee credit union look better and better.
Tim*
@Joe Smith
The latest from the Credit Union movement is a letter from Central One to US Treasury.
http://bsmlegal.com/PDFs/Central1.pdf
Basically they call to exempted completely. They also indicate that a significant number of individual CU’s will refuse to comply and thus Central One will have major problems. Central One also seems to indicate that if a solution is not reached soon the Canadian Payments Association and the Bank of Canada will get involved.
badger@Maura Drew-Lytle;
Thank you for your comments. I appreciate your interest in our concerns. As individuals, we have been speaking with our banks and credit unions and comparing notes. Some have also corresponded with some of your members. We have also written to Minister Flaherty, and other political representatives, as well as the Privacy Commissioner. Some have contacted US politicians, and the ACLU.
I appreciate the presentations that the banks have made – and I have read the presentations where available on the net, as have several others here. Opposition to FATCA in any form or origin is welcome. But, I’d quibble a bit about the nature/form/motivation of some of the opposition, since some of the CBA member’s investment affiliates have advocated not against FATCA itself, and the impact on clients, but in opposition to the ‘compliance burden’, and costs, thus are advocates for a government-to-government reporting approach to take the onus, costs and heat off themselves. It would help to deflect negative attention away from financial institutions and investment firms if they could point to government as the source of the implementation instead. If the Canadian government does agree to do that, there would of course be a cost – which would be paid for by all Canadian taxpayers. And since we all pay taxes to Canada, whether we also hold US taxable status as well, everyone in Canada will share in implementing the costs – with zero benefit. Whereas, banks, insurance companies, etc. will continue to have unimpeded access to US markets, with less direct cost borne by their shareholders. This is where our interests diverge quite a bit – I don’t want FATCA at all, and have no interest in settling for a less expensive version.
For example I don’t have the full article below, but I think this illustrates my point;
“FATCA Partners” agreement would limit compliance burdens, Canadian trade group says Feb 14 2012
by Emmanuel Olaoye
“Ian Russell, president of the Investment Industry Association of Canada (IIAC), said the changes would be a “very positive step” for Canadian firms if Canada signed on as a FATCA partner.
“It would resolve the problems of conflicts in privacy laws. We are obliged to provide information to foreign….” http://www.complinet.com/global/news/news/article.html?ref=152318 The IIAC has a member list here: http://www.iiac.ca/welcome-to-iiac/about-us/iiac-members , and you will see that there are members who have relationships with major Canadian banks.
I think I’d be more inclined to appreciate the efforts that banks have made, without as much criticism if they had tried to alert their customers in ways that would help marshall popular and political resistance against FATCA – rather than only post information on a website they would have no reason to look at. I note that banks aren’t alone in that. Pension plans have not followed up on the suggestions by affected account holders to notify their members of the pending crisis either. I haven’t seen any full page newspaper and media ads to that effect – unless I missed them. There has been surprisingly little coverage of FATCA domestically or in the US.
Re your comments:
“However, they may have no choice as FATCA is currently written because the non-compliance would have a much larger impact on more of the financial institutions’ customers. The penalty for being unable to comply with these complex rules is very severe for both banks and their clients.”
From the CBA site, this is the broad group of mostly Canadian citizens who will be affected:
The CBA site says the affected would include:
- A citizen of the U.S. (including an individual born in the U.S. but resident in Canada or another country, who has not renounced U.S. citizenship);
- A lawfulresident of the U.S. (including a U.S. green card holder);
- A person residing in the U.S.
- 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.
- U.S. corporations, estates and trusts are also considered U.S. persons.”
Many of those above will also be dual Canadian/US citizens by birth or naturalization. Some may hold US only citizenship – but be decades-long permanent residents.
The CBA no doubt is working from its own estimated statistics of how many accounts would be affected – that would just be good business planning. I’d be interested in knowing what numbers you’re using. I think that it is at least an estimated million or more US taxable ‘persons’ in Canada (not just citizens, but duals, snowbirds, greencard holders, etc. Correct me if I’m wrong?
All the persons in the categories above would suffer directly from Canadian bank and financial institution collaboration with the FATCA regime. Those deemed by the US to be ‘taxable persons’ living in Canada, all have families, and many have single-citizenship Canadian spouses or other relatives who may hold joint accounts with them. Even if not jointly held, one member of the household – say a breadwinner – who is refused banking, has their account closed, or suffers a 30% witholding, will affect an entire Canadian family. Add to that all the Canadian business accounts that could be affected. And mortgages, and savings, pension, life insurance – and other types of accounts – since the list of what FATCA includes is longer than any small exclusions. That’s a lot of angry customers and a lot of affected accounts and assets.
Some FATCA compliance sites have advised their clients on ways of keeping this low key – so as not to alienate account holders during the process of implementation. I’ve been wondering if that is why when I look at the list of presenters at FATCA hearings in the US, we hear so little from them here at home. One pension plan opined that there was no need to get members upset – in the hopes that they’d be exempted from complying with FATCA. Problem is that people can’t make their objections known in a democracy unless they’re told what is brewing before it is too late. I would have thought that Canadian citizens and residents could be partners with their financial institutions in approaching our government with our concerns if we’d been alerted when this was first proposed.
How will joint account holders, and beneficiaries fare in this – when only one of them is a US taxable person with a FATCA obligation? How will banks treat this situation? I’m assuming that even the single-citizenship Canadians will have to prove that they are not American?
Account holders will have a choice? Won’t we be considered ‘recalcitrant’ then? What is the result of being recalcitrant? “If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, your financial institution maybe required to withhold a tax of 30% on any U.S. source payments1 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.”
You say that banks will be forced to do this because of the impact on all their other clients. Well, who will be paying for the expensive systems to implement FATCA? Only those deemed US persons? Or will it be shared amongst all the other account holders – except that they won’t know that they’re paying for it will they?
Interesting comment you made re; no prohibition on banks closing an account.
“There is nothing in the Canadian Bank Act or the Access to Basic Banking Services (ABBS) Regulations that prohibits a bank from closing an account. The ABBS regulations give reasons why a bank can refuse to open an account for someone, but they don’t give any restrictions on closing an account“
That may be true, I don’t know. Does that make it any more palatable for the account holder – that it’s not actually prohibited? If the reason for closing an account hinges on identifying birthplace, US citizenship (for duals, placing US above Canadian citizenship held simultaneously – often through birth on Canadian soil), or merely US connections (ex. marriage to a US person – on joint accounts and investments). Could that be discrimination? We are in Canada. Shouldn’t Canadian law supercede US laws in our sovereign country?
It may be that the US will win, and FATCA will be imposed on us if our federal government gives in. Savings and assets are of paramount importance to most people – and that means we’re hardly likely to forget this episode in history. Neither will our non-US friends and family when we share with them what happened – even if it becomes legal to do.
If a million or more of us and our joint account holders and beneficiaries end up under the bus as a minor but unavoidable bump in the road, do you think that we will forgive and forget? I don’t think so. Some might be thinking that if and when credit unions – (who operate for and by their members), are also forced to cooperate, that we’ll have no alternatives, and thus we’ll have no choice. This may very well be the case. Perhaps we’ll have no good alternative other than a house full of piggy banks, but we’ll certainly remember who co-operated first, and who started to collaborate before it even became in force here in Canada.
We are fully compliant with the laws in Canada – our accounts are transparent, and are registered and reported with our SIN#s, post-tax earnings, we pay tax on any interest – the CRA already knows everything we have.
Canada is not a tax haven.
nobledreamerThe whole situation gets more depressing by the moment. I can’t imagine the IRS and/or Congress giving a hoot about the importance of Central 1′s ability to service the Canadian system, or whether the CBA wants to comply etc. They only care about what they want and since they can hold that 30% witholding threat over everybody’s heads, there seems to be nothing anyone can do. Unless all the governments were prepared to take the hit and tell them they wouldn’t comply. It is truly hard to fathom that one country can hold that much power over everyone else.
I wish my CLN would arrive. Among all the other negatives, I could not imagine being told I couldn’t have a bank account.
@Tim
perhaps I am missing something but I don’t see a section in the letter from Central One that indicates a significant number of individual CU’s will refuse to comply. Could you point this out to me? I would be thrilled, as all my $$ was moved to CU the minute I heard about FATCA.
http://www.tax-news.com/news/Canadian_Minister_Promotes_New_Pension_Vehicle____56956.html
“It was first decided to pursue a framework for PRPPs at a meeting of federal and provincial finance ministers in 2010. It is hoped that PRPPs will act as an
effective and appropriate way to help bridge existing gaps in the retirement system. They will become available once the provinces pass their enabling legislation.
Automatic enrolment will then take place where an employer offers a PRPP.
“The Organization for Economic Co-operation and Development recently concluded that a growing role for private pensions will be essential to closing the pension gap. With the introduction of PRPPs, we are taking that action.
They are the right solution at the right time to help many Canadians better save for their retirement,” Menzies concluded.”
And for dual Canadian-US citizens by birth or parentage or naturalization? Or longterm permanent residents? And all the others in Canada deemed taxable and with the punitive FBAR and FATCA reporting burden? How does FATCA treat private pooled pensions? What will the ‘compliance’ costs be to the individual ‘automatically’ enrolled in one of these in their workplace if they are deemed by the US to be a US taxable person? How much of this pension will be eaten up by either FATCA compliance costs to the plan, or compliance and reporting costs to the individual. Will this be a ‘foreign trust’ because it is a ‘private pension plan’ and not a government administered one? Remember that this definition of ‘taxable person’ by the US includes more than the estimated 1 million Canadians with US citizenship, it also means green card holders, snowbirds, etc.
What of the beneficiaries of the plans – if a minor with inherited US status who is a beneficiary from a plan members estate, or a spouse?
If Canada doesn’t get these plans exempted from FATCA and FBARs as ‘foreign trusts’, it will be a huge and expensive headache, not a viable solution for anyone deemed a US taxable person. If enrollment is automatic in a workplace, then even if one is allowed to ‘de-enroll’, the account has already existed – and then must be reported to the US/IRS – probably at the account inception, AND at its dissolution – even if only for a day – possibly on the expensive to prepare and complex 3520 an 3520a ?
If the CBA, IIAC and the IFIC and others want to get a piece of these private pooled pension funds, – which of course they really really do – and have lobbied for the creation of, then they should be lobbying to get them exempted from FATCA, rather than for the Canadian government to sign a FATCA agreement. Otherwise, its the usual situation – except that the FATCA compliance costs will add to the PPRP administration costs and eat away at the benefits generated for individual plan members by passing the buck for FATCA costs – to be borne by all the account holders.
Imagine also, your Canadian employer and workplace now collecting your citizenship information to pass on to your workplace pension plan – so as to prove compliance with FATCA, and another instance of second class citizenship for Canadian born individuals, or naturalized Canadians?
I have posted this on another thread, but I want to bring it to CBA attention. Any actions you take to further this, is conscious complicity with the entirely foreseen damage to honest, already fully taxed and transparent account holders in Canada – that will result from the IRS recklessness and haste in the design of FATCA. You can read what practitioners have commented on in terms of the decisions the IRS is making in order to meet their own timelines and goals – at the expense of those that are being forced to comply:
“Form to Certify FATCA Status May Spur Errors, Practitioners Say”
By Alison Bennett
Publication Date: 08/15/2012
“A new draft version of a form that intermediaries and other
entities will need to submit to withholding agents under the Foreign
Account Tax Compliance Act is very complicated and will be difficult for
many taxpayers to complete, practitioners told BNA in interviews Aug.
14.”…..
…“It is going to be very complicated to prepare,” Candace Ewell, a
director in the Washington National Tax practice of
PricewaterhouseCoopers LLP, told BNA. Noting that the form has gone from
two pages to eight pages, Ewell predicted that in many cases, “this
form is not going to be prepared properly.””….
…”
Ewell told BNA that “at eight pages, this has just gotten worse.” She
said there had been suggestions that IRS create several shorter forms
instead of combining all the reporting and certification requirements
into a single form, but acknowledged that IRS is working against the
clock.
New forms would have to go through the Paperwork Reduction Act and
likely would have taken time that is in short supply, Ewell said. “There
would be additional approval processes, so they don’t have the time,”
she said.”….
http://www.bnasoftware.com/News/Tax_News/Articles/Form_to_Certify_FATCA_Status_May_Spur_Errors,_Practitioners_Say.asp
You, the CBA are entirely cognizant of the gravity and scale of the penalties asserted by the IRS against any individuals who make even inadvertant errors in trying to comply with the current IRS forms and reporting – even in the absolute absence of any US tax assessed or owing. The scale and scope of the penalties can wipe out the entirely legal post-tax assets of any household and family. And that is merely for a ‘reporting’ or information error – in the absence of any actual US tax owing. Now, the stakes are exponentially higher. And the pitfalls grow in complexity – even for ‘professionals’. The current price of a US tax lawyer in Canada ranges from 450-750. per hour and more. No ordinary account holder could afford to defend themselves – in spite of their innocence. That is what any FFI is complicit with if they comply with the US/IRS. You know that this is not about real tax evaders or terrorists or money launderers – it will be the ordinary family and ordinary Canadian taxpayers that will suffer – needlessly.
As a trading partner and ally of Brock, Maple Sandbox shares information from Maura Drew Lytle and the unpublished Opinion Piece from CBA to Washington Post at http://maplesandbox.ca
@Blaze,
Thanks for the link. I was wondering when we’d hear from her again. The Australian government is asking for input on FATCA. Where’s Canada? Still that deafening silence…
http://isaacbrocksociety.ca/2012/08/28/australian-government-wants-you-to-tell-them-what-to-do-about-fatca/
Posting here the link to Professor Cockfield’s interview on CTV re illegality of FATCA under NAFTA, and firm statements as to the necessity of unequivocal Canadian federal government resistance to this US overreach http://www.ctvnews.ca/video?clipId=752189&binId=1.810401 States that Canada is not a tax haven, and that there would be very little US tax to be generated from those within Canada.
Very grateful to Professor Cockfield. Now, where are you Minister Flaherty and Prime Minister Harper?
Canadian financial services sector comments on FATCA draft forms:
http://www.fsitaxposts.com/wp-content/uploads/2012/09/Canadian-Bankers-Assoc-FATCA.pdf
Interesting points about the legal/illegal use and disclosure of SIN numbers, privacy, and Canadian law, as well as the issues of official versions of all those forms and instructions in languages other than English. Specifically French language in Canada, as we are officially a bilingual country, but the CBA document also mentions in passing that other languages would be required – which of course would be the case when FATCA is being imposed on the entire world. Currently the IRS forces those in other countries to bear the significant cost of providing taxpayer submissions and filings plus supplementary documents translated to IRS satisfaction, by certified translators. Those service don’t come cheap.
And I am wondering also, how do US IRS requirements for duals intersect with sovereign rights of Canadian First Nations re taxation? Presumably there are dual Canadian citizens/US persons who are also First Nations individuals.
Sorry, meant my comment above to refer to the CBA link provided by @bubblebustin;
“Canadian financial services sector comments on FATCA draft forms” :
http://www.fsitaxposts.com/wp-content/uploads/2012/09/Canadian-Bankers-Assoc-FATCA.pdf
Note to site admin, the edit function for IBS posts isn’t working at the moment. Once posted, there is no longer the timed option to edit.
@badger
Should I make a new post of the financial sector’s comments using your comments as analysis, of course attributing them to you?
A carve-out for Canada?
“From our perspective, it therefore makes sense to build on the legal frameworks that have already been established between nations to exchange taxpayer information rather than to try to create an entirely new set of state-to-bank relationships with an entirely new data collection, reporting and withholding framework,” CBA spokeswoman Maura Drew-Lytle told The Bottom Line.
http://www.thebottomlinenews.ca/index.php?section=article&articleid=584
@bubblebustin, if you think that would be more useful. I don’t care about the attribution. I lost track of this thread, and just saw your comment.
*That article is a bit of old news I believe reflecting information from last May. I am not sure negogiations have gone well since and as such are reflected in some of the more negative comments from John Weston and Flaherty. I also have pretty good information that there is a strong likelihood that nothing new will come out of Ottawa about FATCA for the remainder of this year. The US seems to have announced semi-privately that the final FATCA rules will not be published until late November/early December and possibly not until Christmas. A “draft” FFI agreement will then be published shortly afterwards which could be as late as the beginning of next year. There is actually a chance that there might not be an substantive discussion over FATCA in Parliament until 2014. Two thoughts on this last note. Flaherty might no longer be Finance Minister by then and by 2014 we are talking election season again so where the NDP come down on this at the end of the day is awfully important.
@Tim
The article is dated July so I thought her comments may have been as recent as that, however the article doesn’t mention when she was quoted, so the question begs to be asked: Ms Drew-Lytle, what is the state negotiations between Canadian banks and the US on FATCA ?
@Badger
Thank you. I blasted ahead anyway 🙂
Canadian Financial Services Sector Comment on FATCA Draft Forms
@Tim, then we have to get a firm public commitment from the Federal NDP. All those reading and participating here who have NDP connections and memberships MUST immediately contact the NDP. There have been telephone town halls with Leader Thomas Mulcair recently, where they took live questions from members, and those who are NDP can ask – and should ask re FATCA and the extraterritorial arrogance of the US taxation of Canadian residents and citizens inside Canada. Mulcair has heard at least something about FATCA, OVDI, FBARs, the revenue rules, and even some of the issue of immigrants with prior existing accounts, because the Hansard record shows he participated on a committee who listened to comments by Scott Michel of Drysdale Caplin http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=4937782&Language=E&Mode=1 I recommend that everyone read this, and perhaps the other proceedings of this committee. It reflects in some parts, at least in the tone of comments, a misunderstanding of the situation of duals and permanent residents in Canada – by partly taking at face value the US mischaracterization of us as tax evaders hiding bank accounts. That is apparent in this briefing note http://www.parl.gc.ca/Content/LOP/ResearchPublications/2012-31-e.htm ex. ..”Interested parties in Canada are continuing in their efforts to have
their concerns about the compliance burden that may exist in relation to
FATCA addressed.”… the wording casts unwarranted doubt on the issue, and this is in an official Library of Parliament publication.
As Tim says, Minister Flaherty may not be around to continue to stand firm on FATCA and US extraterritorial taxation inside Canada, we will have no federal cabinet minister to be our Canadian champion. The MP Mai, and the BC NDP caucus has been very firm and very helpful – but Denise Savoie has had to step down for health reasons.
Although not a member of the NDP I somehow got a call to listen in on the telephone town hall meeting with Tom Mulcair. I was able to leave a message about FATCA at the end of the meeting.
There has been no response to my message.
*According to Joe Smith who has NDP contacts the party’s position is the same as it has always been however, they have heard little more than we have from what Joe has heard. The point I was making is they and us might actually not hear anything from the government at all this year on this issue. The US government is supposedly telling the banks as long as Canada and the US “sign” an agreement but not necessarily ratify or implement it before December 31 2013 they will be in the clear for the short term. Note the time between treaties are signed and ratified can be quite long. So in theory we could be waiting until sometime in 2014 before there is any real debate. The thing is by that point I don’t see the conservatives are going to want to be ramming any unpopular legislation through that close to an election.
*Two things to remember about the NDP. First most of their front bench Davies(both Libby and Don), Leslie, Mai, Julian, Cullen, Dewar opposes FATCA. Second Mulcair and Peggy Nash have never said what their personal opinion is on it. That is something I don’t like. Having said the idea the party could reverse the position held by some pretty prominent people in such as Nathan Cullen who by most accounts help deliver the leadership to Mulcair or someone like Jean Crowder would be pretty extroadinary. What I don’t like is the idea that Obama or one his minions at the White House like David Axelrod or Robert Gibbs might try to go directly to Mulcair to get his support for FATCA.
*Here is the calendar for this fall meetings of the HofC Finance Committe
That the following calendar of activities be adopted:
o September 27 – 5p.m. – Deadline to submit amendments for Bill C-28
o October 1 – 3:30p.m. to 5:30p.m. – Clause by Clause consideration of Bill C-28
o October 3 – 3:30p.m. to 5:30p.m. – Study on Tax Incentives for Charitable Donations, meeting 1
o October 15 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 1
o October 16 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 2
o October 17 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 3
o October 18 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 4
o October 22 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 5
o October 23 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 6
o October 24 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 7
o October 25 – 3:30p.m. to 5:30p.m. – Bill C-377, meeting 1 (Sponsor of the Bill during the first hour)
o October 29 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 8
o October 30 – 3:30p.m. to 5:30p.m. – the Governor of the Bank of Canada and the Parliamentary Budget Officer
o October 31 – 3:30p.m. to 5:30p.m. – Potential upcoming Bills, meeting 1
o November 1 – 3:30p.m. to 5:30p.m. – Potential upcoming Bills, meeting 2
o November 5 – 3:30p.m. to 5:30p.m. – Potential upcoming Bills, meeting 3
o November 6 – 3:30p.m. to 5:30p.m. – Potential upcoming Bills, meeting 4
o November 7 – 3:30p.m. to 5:30p.m. – Potential upcoming Bills, meeting 5
o November 8 – 3:30p.m. to 5:30p.m. – Bill C-377, meeting 2
o November 15 – 5:00p.m. – Deadline to submit amendments for Bill C-377
o November 19 – 3:30p.m. to 5:30p.m. – Clause by Clause consideration of Bill C-377
o November 20 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 9
o November 21 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 10
o November 26 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 11
o November 27 – 3:30p.m. to 6:30p.m. – Pre-budget Consultations, meeting 12
o November 28 – 3:30p.m. to 5:30p.m. – Consideration of draft report for the Study on Tax Incentives for Charitable Donations
o December 3 – 3:30p.m. to 6:30p.m. – Consideration of draft report for the Pre-budget Consultations, meeting 1
o December 4 – 3:30p.m. to 6:30p.m. – Consideration of draft report for the Pre-budget Consultations, meeting 2
o December 5 – 3:30p.m. to 6:30p.m. – Consideration of draft report for the Pre-budget Consultations, meeting 3
o December 10 – 3:30p.m. to 5:30 p.m. – Consideration of draft report for the Study on Tax Incentives for Charitable Donations (if necessary)
As you can see above there is nothing even remotely related to FATCA.
@Tim;
re your comment; “Second Mulcair and Peggy Nash have never said what their personal opinion is on it. That is something I don’t like”
I sent out several emails – to all three parties, and did get this response from Nycole Turmel as interim leader, back in March 2012, this year:
“On behalf of Nycole Turmel, thank you for taking the time to write with regards to your concerns with current US tax and foreign bank account reporting laws, and, more specifically, the U.S. Foreign Account Compliance Act (FATCA).
We have heard from many dual U.S.-Canadian citizens and Americans with landed immigrant status who have expressed significant concerns about income made while living in Canada who will be required to disclose information regarding RRSPs, RESPs, TFSAs, chequing, and saving accounts. By 2013, FATCA will require, by U.S. law, all Canadian financial institutions to report information on accounts held by US
citizens.
Please know that New Democrats recognize the significant impact that such a law will have on the finances of dual citizens and landed immigrants. FATCA, for example, may arguably remove any benefit from the use of TFSAs and RESPs.
For your interest, please see the attached letter sent to both Finance Minister Jim Flaherty and Foreign Affairs Minister John Baird. It is jointly signed by 12 NDP MPs and highlights the legitimate concerns with the requirement of Canadian financial institutions to report financial information on their clients to the IRS, as well as addressing how FATCA may violate our reciprocal tax agreement with the United States. The NDP is urging the Canadian government to enter into discussions with its US counterparts and negotiate protective measures for those Canadians who will be hurt if the IRS is allowed to proceed with their plans.
Again,thank you for taking the time to write about this important issue. Please know that we will continue to pressure the government to address this issue to ensure those who earn and invest in Canada are not subject to U.S. taxation.”
Sincerely,
Office of Nycole Turmel, M.P.
Interim Leader of the Official Opposition
New Democratic Party of Canada
*That is roughly the same position as Denise Savoie, Don Davies et all had around that time. So it is was even more widespread in the party that I had previously thought. Perhaps we are heading for a real train wreck.
(in pasting this on here, the formatting is a mess, apologies), but below is the letter to Minister Flaherty, that was an attachment Ms. Turmel sent along with her very strong reply. It is signed by the NDP BC caucus. I would be very happy to see equivalents from other NDP politicians across Canada.
October 14, 2011
Honourable Jim Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ,Ontario
K1A 0A6
Honourable John Baird, P.C., M.P.
Minister of Foreign Affairs
House of Commons
Ottawa, Ontario
K1A 0A6
Dear Ministers:
Re: United States Internal Revenue Service; Enforcement Policy Against Dual Canadian-US Citizens
As you are aware, the United States Internal Revenue Service is pursuing a series of measures aimed at addressing tax evasion and the use of offshore accounts to shield assets from US taxation. As you are further aware, these measures have been directed at Canadian citizens who are residents of Canada holding US citizenship in a most punitive, unfair and unacceptable manner. These measures include the imposition of onerous filing and reporting requirements, unreasonable penalties (even in the absence of any taxes owed) and privacy-violating disclosure obligations.
Our riding offices have received calls and letters on almost a daily basis from constituents who are dual citizens. They are justifiably concerned with, and upset at, the prospect of disclosing their confidential banking information to an agency of a foreign government, particularly when they have no earnings there. In many cases these accounts are held jointly with Canadian-born spouses who are forced to disclose their information to the IRS. All are fearful of heavy penalties on their families’ savings in Canada for non-compliance with US tax laws they did not know were relevant.
This problem is particularly disturbing when one considers that the vast majority of Canadians affected have lived in Canada, earned their incomes in Canada and paid taxes to Canada for most, if not all, of their lives. Almost all of these citizens had no idea that they had to file US tax returns, have no US income and do not owe any back taxes to the US. Yet, they are being asked to pay heavy penalties that amount to little more than a seizure of their assets.
Canadians are also being asked to file financial disclosure documents with the IRS for each and every financial account that they have with over $10,000 in assets. This is an invasive and burdensome requirement. Moreover, we understand that the US intends to require Canadian financial institutions (via the proposed Foreign Account Tax Compliance Act) to report personal financial information respecting Canadian accounts to the IRS in 2014.
Over-arching all is the obvious point that Canada is most certainly not a tax haven, and almost every Canadian citizen affected has not in any manner whatsoever been engaged in tax evasion of any type.
We want to thank Minister Flaherty for taking a public stand in support of dual Canadian-American citizens against the Internal Revenue Service’s cross-border tax enforcement initiatives. However, it is our collective opinion that further action is required.
We urge the Canadian government immediately to enter into discussions with its US counterparts with the following objectives:
1. Negotiate an exemption for Canadian citizens to file US tax returns in circumstances where those citizens have no US income or assets, or who have no real connection with the United States;
2. Negotiate a true amnesty that allows Canadian citizens to file US tax returns, with a reasonable retroactive component, free of any forfeiture or penalties save the taxes owed, if any, and reasonable interest;
3. Advise the US that Canada will not proceed with the stated desire of the United States to require Canadian financial institutions to disclose financial information of its Canadian clients to US authorities;
4. Push the US to refine their reporting criteria to differentiate between those US citizens they claim to target who deliberately engage in activity to evade US taxation and Canadians who annually report their income and financial accounts to Canada Revenue;
5. Advise US authorities that it is unacceptable for tens (perhaps hundreds) of thousands of law-abiding Canadian citizens to be threatened with onerous penalties and legal action by their newly-introduced financial disclosure enforcement policies.
The potential of forfeiture of Canadian assets to the US threatens many Canadians’ income security and amounts to an unacceptable and unjustified transfer of wealth from Canada to the US. We hope that the government will work with MPs of all parties in the House of Commons to preserve Canadians’ interests and protect Canadians from the US Internal Revenue Service. We urge you to take strong steps in this regard.
Sincerely,
NDP British Columbia Caucus
Don Davies, MP
Vancouver Kingsway
Alex Atamanenko, MP
BC Southern Interior
Jean Crowder, MP
Nanaimo-Cowichan
Nathan Cullen, MP
Skeena-Bulkley Valley
Libby Davies, MP
Vancouver East
Fin Donnelly, MP
New Westminster-Coquitlam
and Port Moody
Randall Garrison, MP
Esquimalt – Juan de Fuca
Peter Julian, MP
Burnaby-New Westminster
Jasbir Sandhu, MP
Surrey North
Denise Savoie, MP
Victoria
Jinny Sims, MP
Newton – North Delta
Kennedy Stewart, MP
Burnaby Douglas
Basically, we did not get any of the very laudable and firm requirements that this group of NDP MPs requested Flaherty negotiate with the US. And what will Minister Flaherty do now that we know that the long awaited ‘new commonsense’ ‘simplified’ path to IRS compliance only fits a very few ‘unicorns’?
http://news.gc.ca/web/article-eng.do?nid=683359
http://m.theglobeandmail.com/globe-investor/personal-finance/irs-tars-law-abiding-expats-with-same-brush-as-tax-cheats/article4199112/?service=mobile
BARRIE McKENNA
IRS tars law-abiding expats with same brush as tax cheats
BARRIE McKENNA
OTTAWA —
The Globe and Mail
Last updated Monday, Sep. 10 2012, 10:50 AM EDT
…”If the IRS were truly interested in tax compliance, it would design
an amnesty program specifically for tax-paying ex-pats who desperately
want to come clean. There should be no penalties for people whose only
sin is not filling out paperwork.
Better still, put in place a painless way for Americans to renounce
their citizenship – one that doesn’t require handing over a sack of cash
to the IRS as a precondition.
Until there is a more reasonable path to amnesty, tens, and perhaps
hundreds, of thousands of Canadians will continue to live like fugitives
in their own country, worried the U.S. may grab their savings and
fearful of traveling to the United States.
The Canadian government and Canadian banks, who are poised to become
agents of the IRS, must do more to convince Washington there is a better
way to go.
It’s hardly a situation either country can be proud of.”
@Tim
Thanks for posting the Finance Committee’s Calendar. Several dates have been allocated to pre-budget consultations. In the link you posted for pre-budget submissions, one is notably from the Canadian Bankers Assn. Although they aren’t specific to FATCA, they state:
“We support the federal government’s initiatives to broaden Canada’s trade and investment relationships. Over the last several years, the federal government has actively negotiated, signed and brought into force several free trade agreement (FTAs), foreign investment promotion and protection agreements (FIPAs) and other agreements. These initiatives provide an increased level of predictability, certainty and access for Canadian business. While pursuing these trade negotiations in the future, the CBA encourages the federal government to consider including measures that would prevent the extraterritorial application of foreign laws to Canadian financial institutions and accountholders.”
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/CanadianBankersAssociationE.pdf
Besides this, I personally know of at least one submission that directly addresses FATCA!
I hit pay dirt in the pre-budget submission from the Investment Funds Institute of Canada:
‘The United States, in an effort to combat tax evasion by their citizens have enacted the Foreign Account Tax Compliance Act (FATCA) and have also ruled that Canadian mutual funds are Passive Foreign Investment Corporations (PFIC). IFIC is asking that the Canadian government actively engage their U.S. counterparts to come to an agreement on FATCA that strikes a better balance between preventing tax fraud in the U.S. and imposing additional costs and administrative burdens on Canadian investors and financial institutions.’
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/InvestmentFundsInstituteofCanadaE.pdf