I found a pretty good research paper back from 1997 describing the old Filipino system of of citizenship based taxation and the impact of the Canada Philippines Tax Treaty. Like the US Canada Treaty the Filipino treaty had/has a “savings clause” allowing the Philippines to tax its citizens living in Canada on Canadian source income. The paper suggests a route to bringing a charter challenge to get the treaty thrown out on the basis of equality of citizenship (something we have talked a lot about here). This is big very big. I am going to try to track down the author of this paper.
Double taxation: Riding on the backs of Filipino export labour, by Genevieve Hamada-Plank , Ottawa Law Review / Revue de droit d’Ottawa 29 (1997-98) 395-423.
*Please get in contact with MP Craig Scott who is a human rights lawyer and is working on this file for the NDP.
craig.scott@parl.gc.ca
@ Tim, yes the Philippines which had been a colony of the US before it was granted its independence after WW II, copied the US citizenship based taxation. I don’t recall when it was, but it was abandoned and replaced with residence-based territorial taxation quite a few years back.
If only the US would get wise and follow the example of the Philippines, we would all be better off.
We aren’t really any further along as the paper makes the same arguments against the Philippines as we at Isaac Brock have been making against the United States and the Canadian Bankers Association–you can’t treat us like this, as it is against our charter rights, against international law, and even against the tax convention. Still, it is nice to see the same arguments written down in Canadian law article.
It is also a great idea to contact the author, and see if you might be willing to make some pro-bono contributions to Isaac Brock on the subject of USA taxation of Canadian residents.
Well two things I got out of this are the collection of SSN’s during both passport renewals and relinquisments/renounciations at Consular offices on Canadian soil are in likelihood violations of international law akin to what was going on with Eritrea.
There is no requirement for example to provide a social insurance number to Passport Canada.
@ Tim, Also, IRS audits on Canadian soil would be prohibited, depending on the tax convention allows. I notice that some of the language of the Philippine tax convention was similar to the US convention; such as rules about taxation being more burdensome for a person in Canada than it would be if the person were resident in the United States. But this part of the convention has been completely destroyed by the “last in time” rule and the Alternative Minimum Tax.
Great find @Tim;
I love the title. ‘ Double taxation: Riding on the backs of Filipino export labour ‘ Think of the impact of this possible article – ‘ American extraterritorial taxation in Canada: Riding on the backs of US citizens abroad and US export labour’ That would be very timely – as the US and Canada are currently in talks to expedite the export of unemployed US citizen and US veteran labour to Alberta to fill the ‘shortage’ http://www.edmontonjournal.com/business/Foreign+worker+hiring+fast+tracked/6944886/story.html http://www.calgarysun.com/2012/07/04/us-vets-eyed-for-alberta-jobs http://news.opb.org/article/alberta_looks_to_lure_pacific_northwest_unemployed/ . If the US and Canada do facilitate and fast-track US unemployed to fill jobs here, as reported, there will be significant numbers of temporary US workers moving to Canada facing all the draconian US extraterritorial taxation fines and labyrinthine US tax laws that we face – without any assistance or warning. The US and Canada are not going to alert them to the costly tax and legal problems they’ll be in jeopardy of falling into inadvertantly. They’ll all have to have ‘foreign’ Canadian bank accounts, etc. They’ll become victims of the ‘FBAR and FATCA fundraiser’ too.
That article backs up what we’ve been saying – and in a specifically Canadian legal context too – if extraterritorial taxation isn’t okay for Eritrea and the Philippines then it isn’t okay for the US to operate without restraint on the basis of whatever it arrogantly imposes, in Canada either. The US is obviously working to ramp up the burden on all those millions living outside the country without any consideration of ethics, fairness or justice – and there is no limit to what it can decide that those ‘abroad’ owe it. It can change all the reporting thresholds, abolish exemptions and the foreign tax credit structure at will. It can redefine the terms for renunciation and US citizenship at will – as it has numerous times in the recent past.
We only very barely escaped being subjected to the Obamacare tax, not because they realized it was unfair and of no possible use to us abroad, but only because the various expat groups, ACA, AARO, lobbied and worked over a considerable period of time to get the wording changed – the bill was originally designed to include us. It wasn’t a slam dunk to get us exempted. We just didn’t know how close we came to being unwitting and unwilling US healthcare contributors (with the usual penalties enforced by the IRS).
Good to see the Canadian constitutional and rights argument, and the reference to international law and recognition of the burden and hardship issues. There may have been some more recent journal articles that cite this one?
@Tim, re; “two things I got out of this are the collection of SSN’s during both
passport renewals and relinquisments/renounciations at Consular offices
on Canadian soil are in likelihood violations of international law” . Could you elaborate?
Maybe the validity of some of the requirements on that form DS-4079 are suspect too.
*The US does not care about international law.
But Canada might.
@badger,
Here are a lot of potential new customers for Alberta / Canada US tax and law professionals:
http://www.calgaryherald.com/business/Alberta+rule+changes+opening+door+skilled+foreign+workers/6943243/story.html#ixzz20uesdCdq
and my comment (limited by number of characters I could use):
Am I wrong about these questions or an even bigger one – can they be given special US tax and reporting treatment over other “US Persons” in Canada with their special visas? At any rate, it will be unethical and immoral to not warn them before they come here to work, a big move for any one / any family.
*@Tim & Badger; I am also interested in Tim’s reference to international law. I don’t know of a single case where the US allows itsself to ever be subject to “international law.” That’s a very tender subject whenever it comes up in Congress. US law is what governs in the US and our leaders never let us forget that fact.
*Americans who relocate to
Calgarynorthern Alberta to take advantage of the employment opportunities there need to be made aware, by any and every means possible, that if their employer picks up any part of their additional tax costs, these employer-paid costs are taxable income for the US citizens who benefit from this tax equalization benefit. There is no such thing as a free lunch when it comes to employer paid benefits for Americans living and working outside of the US. And the next year if the employer reimburses them for the tax on that tax, that is also taxable. It is like a snowball; it just keeps getting bigger with each passing year.@Roger,
And, would they not have to file Canadian tax returns (working and living in Alberta, more specifically much more north than Calgary where the workers are needed) and, as all of us here, US tax returns, FBARs, 8938’s and all the other myriad of forms they did not have to file when they lived and worked in the US (a whole different and more complicated process)?
Is this not the same as the US not advising green card immigrants to the US of their new tax and reporting responsibilities — for the rest of their lives (or until they properly give up the green card)?
Will these workers have any idea of any of this on their own? I think not. But perhaps they are more savvy than someone like me.
It should be like reading an arrested person their rights; or in this case the removal of their rights.
@Roger: Unfortunately, Congress also never lets the rest of the world forget that they think their laws should have universal supremacy over those of other countries. If they respected the laws and courts of other countries, we wouldn’t be in this mess now.
I’m still waiting for the Canadian government to say: Canadian banks must adhere to Canadian law and Canadian laws will not be changed to accommodate a foreign government.
By not doing that, the Canadian government is enabling the arrogance of the US to intrude into the lives of honest, responsible Canadian citizens and residents with the help of Canadian banks (however “unwilling” that cooperation may be).
Take a look at this and this:
http://www.cic.gc.ca/english/pdf/kits/citizen/CIT0302E.pdf
http://www.ppt.gc.ca/form/pdfs/pptc153.pdf
Where is there anything in either of these documents that discusses taxes or SIN’s.
It is a foregone conclusion that there will be no special concessions on the part of US citizens who take jobs in
Calgarynorthern Alberta. They will be treated no differently under US tax laws than any other US citizen living and working in Canada or in any other foreign country.As it was well-expressed with respect to the old Phillipine law which taxed citizens of that country working abroad, it is an export tax on US labor. It is not just the tax itself but all of the additional costs they must endure in order to submit totally compliant US tax returns and all of the other forms and reports that US citizens living abroad must submit, or be subject to severe penalties.
If they were to allow special concessions for Americans in
CalgaryAlberta they would have to do it for US citizens everywhere else. Highly unlikely. I am sure that Congress considers it more important that US taxes be collected than it is for unemployed Americans to find employment inCalgaryAlberta. Cruel and heartless, but nevertheless true.It remains to be seen if Canadian banks are going to allow US persons to have bank accounts. Perhaps they will decide to do what some of the banks in Switzerland are doing: establishing subsidiary banks for US persons only where the minimum deposit balance you must maintain is US$ 1 million and the monthly service fee is $1,000.
*
There is NO way my credit union is going to trounce this customer of 28 years!
I wrote Minister of CIC, Jason Kenney, again today. I find his silence on this whole US issue deafening, and frightening, and wanted to see if I would at least get a response this time.
Dear Minister Kenney,
If you truly believe in the three priorities you list on your website, then you must be very, very concerned about what is happening to Canadians with US connections.
You state your priorities are:
Stronger Canada. Stronger Economy.
– Allowing US born Canadian citizens to be treated as 2nd class citizens weakens Canada at home, as well causing damage to our international reputation.
– There can’t be much doubt that allowing the United States to claim the earnings and retirement savings of potentially one million Canadians will weaken Canada’s economy.
Strengthening Canadian Citizenship
– There are many hundreds of thousands of Canadians who were either US born or have US connections, and who have been proud to be Canadian; don’t turn us into second class citizens who do not have the same rights as every other Canadian.
Reducing Tax Burden For All Canadians
– If hundreds of thousands to a million Canadians are forced to pay taxes, fines and penalties to the US, you cannot claim that the tax burden has been reduced for all Canadians.
Given your priorities, I find it quite strange that I can find no public comment by you on the travesty that the United States government is forcing upon Canadian citizens with US connections, with FBAR, FATCA and the United States citizenship-based taxation.
You have stood up for Canadians from Eritrea – why are you not standing up for Canadians from the United States? The IRS and the media have been waging a campaign based upon fear – and it’s working, because we are very afraid.
As Canadian citizens, we need your help. We need the protection of our government. We need someone to tell the United States that they cannot re-claim our citizenship, that they cannot rewrite their laws and apply them retroactively to Canadians who thought they gave up US citizenship long ago.
Most of us are looking for a statement from both governments recognizing that our allegiance is to Canada and that we owe the US nothing – no taxes, no penalties, no fines, and no private and personal information.
Minister Flaherty’s office keeps insisting that talks are underway. Do those ’talks’ include the status of our Canadian citizenship? Is there any chance of a statement such as I’ve described? I dream of finally be able to sleep at night without having to worry about my bank accounts being closed, about my mortgage being refused, about having my entire life savings wiped out.
I am a Canadian – only – and have identified with being so for 36 years. Please don’t let the US steal my identity as a Canadian from me.
@Outraged: Good Luck with your strong, articulate letter to Jason Kenney. After several months, I finally received a letter from him that my correspondence had been forwarded to Flaherty (Didn’t anyone see I had already written to Flaherty and had copied Kenney on it?!?
I hope you get a better response than I did. After my initial letter from Flaherty, he has had no further response to the four detailed e-mails I have sent him.
We need to keep up the pressure on politicians, banks and CBA.
@Joe Smith: No way is my bank of 35 years going to trounce me either–despite what Maura Drew-Lytle might say about their right to close my account or what she might think about their right to ask me about my place of birth.
In the meantime, I have already transferred significant funds to a credit union. Ms. Drew-Lytle does not exactly instill confidence that our rights will be protected, does she?
great letter to Kenney
I have everything and I mean everything in the Credit Union. Transferrred checking and saving accounts from RBC last winter.
@Joe, thanks. I’ve been moving to a CU, as well, just in case.
@Blaze, thanks to you, too. On my previous letter, I got the same response – referred to Finance. This time I wrote only to him. We’ll see. I’m certainly not holding my breath. But dammit, I want something from CIC. This is not just a financial matter! His silence ticks me off, frankly.
@Outraged: As Tiger says “The silence is deafening.”
I don’t care what is going on behind the scenes. The government needs to reassure it’s Canadian citizens with two simple statement: Canadian banks must adhere to Canadian laws. Canadian laws will not be changed to accommodate a foreign government.
Why is that so hard?
@Blaze
You are so right. I would really find it reassuring if the Canadian government just came out and spoke the above statements. Their silence is deafening and that deafening silence has now become outright cruel.
@ outraged. Bravo for your letter.