The exact text is:
NEGOTIATION OF AN INFORMATION EXCHANGE AGREEMENT WITH THE UNITED STATES
November 8, 2012
Negotiations are being held between Canada and the United States on an agreement to improve cross-border tax compliance through enhanced information exchange under the Canada-United States Tax Convention, including information exchange in support of the provisions enacted by the United States commonly known as the Foreign Account Tax Compliance Act (FATCA).
The purpose of this bulletin is to inform persons whose interests are affected by the provisions of FATCA that the Government is actively seeking a solution to issues raised by such provisions. The Government of Canada has received input from many individuals and groups in relation to the implications of FATCA.
Persons wishing to offer additional comments concerning the negotiations may send their views to:
Department of Finance
17th Floor, East Tower
140 O’Connor Street
For further information contact:
Business Income Tax Division
I strongly suggest that the Isaac Brock Society make a formal submission. I am happy to volunteer my contribution to this – and I hope others will too. I note the following comment on this topic by Jim Jatras.
Canada seeks public input into #FATCA negotiations with Form Nation fin.gc.ca/treaties-conve…
— U.S. Citizen Abroad (@USCitizenAbroad) November 8, 2012
I have tweeted him to put some of that energy into stopping FATCA too! As this is just the US in reverse.
@Just Me – Maybe, maybe not. The US *really* wants Canada to sign on, just for the look of the thing, and *really, really* doesn’t want to be publicly told to go to hell. They’re negotiating from a position of weakness, in a lot of ways. There’s not a lot of love between Harper and Obama, never has been. At least in theory this Tory government is against the kind of big-government exercise that FATCA is as good an example of as any.
Honestly, if I was a Canadian trade negotiator I’d see it as the biggest gift of the last 20 years.
@A broken man on a Halifax pier
I am just telling you the reality as I see it. The only thing negotiable on the IGA is Annex II. The basic model contents remains unchanged. So, Harper can try tying something else to his signature of the IGA, but it won’t show up on the boiler plate of the IGA anywhere that you can see it.
Here are some examples of what you might get.
Running Comparison of Annex II of the Signed IGAs
@A broken man on a Halifax pier- I personally don’t think that Canada should sign anything. The worse thing that could happen to FATCA is for Canada to refuse to sign it. I am not an international legal scholar but I don’t remember ever hearing of any international law that requires any country to agree to enforce the laws of another country within the jurisdiction of the country that did not formulate the law.
It is quite clear that enforcement of FATCA by Canada on Canadian residents leaves the Canadian legislature as nothing more than an administrative outpost of the U.S. Canada should just walk away unless the Americans are willing to throw the whole matter open to examination by the Canadian legislature. Why would any country in its right mind agree to a contract that will do nothing but harm itself? Does the U.S. really think so little of every other nation on this planet?
Sometimes the best choice to make is the one that seems the most counter intuitive. Saying no to FATCA fits in this situation. If the Canadian’s say no then the whole matter will be thrown back into the lap of the U.S. The U.S. Treasury would have to go to Congress and explain why and how America’s number one trading partner and number one supplier of oil is not willing to play ball. This may finally wake up the members of Congress to the ramifications of a law that even many of them know nothing about or else have very little understanding of.
I don’t believe that it is Canada’s responsibility to enforce U.S. citizenship based taxation on itself. Just because some U.S. judge determined that citizenship based taxation was Constitutional does not really make any difference to any other country. Any country is free to make any number of stupid laws but that doesn’t mean that any of them are enforceable outside of its jurisdiction.
Now is the time to kill this monster and not feed it.
Someone I know in closing her letter to the Department of Finance wrote: “after all, I pay taxes in Canada, the IRS doesn’t”.
Yup, what you said.
Early last week, I sent the following submission to Kevin Shoom, with
copies to Minister Flaherty, my MP, and Elizabeth May. In response to
my concern that the submission might be too late, Mr. Shoom assured me
it would certainly be taken into consideration.
Re: Request for Comments on FATCA IGA Negotiations
The United States is currently attempting to obtain the assistance
of other governments in enforcing a new U.S. law known as the
Foreign Account Tax Compliance Act, or FATCA. FATCA is sold as a
response to offshore tax havens, but its implications are actually
This law attempts to require every financial institution in the
world to search its records to identify clients who are so-called
“U.S. Persons”. (The United States defines a “U.S. Person” to be
anyone, regardless of their actual country of residence, who is a
U.S. citizen, a green card holder, or even someone who has simply
spent more than about four months per year visiting the U.S. over
the last three years.)
Once a financial institution anywhere in the world identifies a
“U.S. Person” client, it will then be required to report to the
United States the total value of any accounts that person owns, as
well as information about their transactions. FATCA requires this
reporting regardless of any privacy laws in the country where the
account is held.
Under FATCA, should a foreign financial institution fail to comply
with this demand for information, the United States will deduct 30%
of any payments made from anywhere in the U.S. to that bank or its
clients. This deduction applies not only to income, dividend or
capital gain payments, but confiscates 30% of returned principal as
Since such reporting violates the privacy and non-discrimination
laws of most industrialized nations, the United States is now
attempting to negotiate agreements with other governments to collect
the information on its behalf and to report it to the U.S., thus
protecting the banks from being squeezed between FATCA and local
privacy and discrimination laws.
Canada’s Proper Response
In the twentieth century, Canada stood with the United States in the
struggle against authoritarian communism, and today stands with the
United States in the fight against religious extremist violence.
Canada should now also stand together with the United States, and
indeed with all industrialized states, against tax evasion.
But Canada has always made its own decisions about these matters.
In the struggle against communism, we forbore from entering the
Viet Nam conflict, even though the United States declared it an
essential part of the fight. After 2001, Canada joined with the
United States to battle international terrorism in Afghanistan, but
Canada made its own decision about the Iraq invasion.
Likewise today, the Government of Canada should take a nuanced
approach to tax evasion, one consistent with the protection of its
sovereignty, and one also consistent with its responsibilities to
its citizens and residents.
It’s entirely appropriate for our government to support the fight
against the hiding of money in foreign lands to evade taxes at home.
Taxing such money makes the tax system seem fairer, which makes
taxes more palatable to us all.
Canada should certainly pass along information about foreign-owned
accounts to the country of residence of the account owner, provided
of course that the country in question reciprocates. Such support
should not, however, extend to sharing the financial information of
legal residents of Canada, be they either citizens of Canada, or
“merely” landed immigrants.
Regardless of the claims of a foreign state, citizens of Canada
should enjoy the protection of their government from harassment by
that state. Even though landed immigrants have not sworn allegiance
to our Sovereign, they have, in many if not most cases, made
significant commitment to and investment in their homes and
communities here, and certainly pay the same taxes as citizens do.
They should thus receive similar protection as well.
Most importantly, all residents of Canada must be able to
confidently rely on the guarantees of the Charter of Rights and
Freedoms, which include the right not to be treated differently
based on national origin.
It is offensive and illegal for a Canadian bank to discriminate on
the basis of national origin by passing private financial
information to a foreign power. Even asking the nationality of a
customer is offensive. While the Government of Canada may have it
within its power to make such discrimination legal, it will remain
highly offensive to Canadian values.
And if the preceding statement seems too strong, one simply needs to
change the name of the foreign state from the United States to
another, say China, Syria, or Iran.
Beyond these historical and moral arguments against acquiescing to
the United States’ FATCA threats, there are practical considerations
The United States Treasury Department offers reciprocity, but will it
actually be able to enforce on its banks the same level of diligence
in identifying Canadian accounts in the U.S. as the FATCA
regulations seek to impose on Canadian banks? Aside from the fact
that the FATCA legislation contains no such powers, it simply
beggars belief that U.S. banks will agree to bear the cost of
identifying the accounts of residents of all the countries in the
world in order to reciprocate. What seems much more likely is that
Canadian banks would be obliged to comply while U.S. banks would
simply fail to do so.
Even if all of the banks in the U.S. did comply with similar
regulations, what information would Canada obtain that it does not
already receive under its special information-sharing agreement with
the U.S.? The costs to our banks of complying with the FATCA
regulations are said to be very high. In light of the high costs,
how much lost tax revenue could actually be recovered with this new
information, and how would that revenue compare to the cost to
The model FATCA Intergovernmental Agreement (IGA) proposed by the
United States would require our Canadian government to to force
those deemed to be “U.S. Persons” to waive their privacy and
non-discrimination rights under Canadian law in order to simply open
bank accounts. Even more egregiously, any Canadian who simply
refused to certify that he was not a U.S. Person could still be
treated as if he were a U.S. Person, and thus be subject to the
same forced release of his private banking information to the United
Note also that in the model IGA, the available means of waiving the
reporting requirements are given in terms of the banks’ rights, not
the account holders’. In other words, if a bank chose not to offer
waivers for self-certification of non-U.S. status, the account
holder could not force it to do so, and thus could still have his
private information released to the U.S regardless of his actual
U.S. Person status.
Finally, if Canada does agree to pass on the private information of
Canadian residents who are also “U.S. Persons”, who will decide
which persons fall into that category? As it stands now, the
definition of a “U.S. Person” is not under the control of our
elected representatives, but is instead subject to change at the
whim of a foreign power. The definition has certainly changed in
the past; it has even changed retroactively, to the great dismay of
many Canadian citizens who found themselves in jeopardy due to the
resurrection of a citizenship they had been forced to relinquish
under U.S. law prevailing at the time of their naturalization in
The Government of Canada should inform the United States that it
would be pleased to share information about foreign-owned financial
accounts with the government of the country of residence of the
account holder, as long as that government actually reciprocates.
It should make clear, however, that it will not share the private
financial information of legal residents of Canada.
The Government of Canada should also inform Canadian banks that it
will provide no relief from any claims under Canadian discrimination
or privacy laws should the banks release the private financial
information of Canadian residents, for example in an attempt to
comply with FATCA on their own.
A Final Thought
Our federal government recently made the long-form census voluntary,
believing that forcing Canadians to report how many bedrooms were in
their homes was too invasive. But does it not seem far more
invasive to report, not to a Canadian government department but to a
foreign power, the value and transaction history of the financial
accounts of as many as one million Canadians?
How can my government even consider such an erosion of its
sovereignty, when it should instead be calling the United States to
account for threatening to confiscate capital entrusted to it?
David W. Querbach
@David W. Querbach
Excellent letter, and very readable and understandable for someone not familiar with FATCA. Thanks for sharing it here for others to use as an example. I might pass it on to some Kiwis for New Zealand submission.
@David W. Querbach- Well done.
Well done David, and thank you for sharing it with us. Always encouraging to know that others here are making submissions too, and to read how the issues are described – in order to inspire our own writing.
Thanks so much for your excellent submission to the Canadian Goverment on how FATCA will affect all of Canada, not just USPs in Canada — thanks for that effort and posting it here. I hope it will be well taken into consideration. I want you to know that I have sent your comment on to Terry McBride, the author of The Star Phoenix: “IRS pursues Americans living abroad” http://www.thestarphoenix.com/business/pursues+Americans+living+abroad/7608929/story.html.
Last week I found the author’s email address (firstname.lastname@example.org) and forwarded some information, letting him know his story was not as accurate as it needed to be. I gave Terry McBride several links from Isaac Brock and the two recent ACA YouTube interviews and hoped he would have a hear and look to learn further before giving advice. It is very important that people do not get the wrong advice.
Mr. McBride emailed me that after studying the information I sent, he is contemplating doing a follow-up article.
Resistance grows to Fatca among key practitioners, customers and countries http://www.investmenteurope.net/investment-europe/feature/2228713/resistance-grows-to-fatca-among-key-practitioners-customers-and-countries
A Big Obstacle
The European Fund Industry View
The US Expat View
The IT Services View
The Practitioners View
I’m going to have a difficult time reconciling paying Canadian taxes should they be used to continuously finance an Intergovernmental Agreement that will effectively help to churn minnows into mincemeat.
@David W. Querbach
Well done and thank you.
The Canadian government must not facilitate the means by
which a foreign government can withhold funds (penalize) Canadians through a Canadian financial
institution, when the Canadian government claimed that it would not
collect penalties and income tax owing on behalf of that foreign country. Is this government not in conflict with itself and its citizen’s best interest in doing so?
About three weeks ago I sent this off to Kevin Shoom (and he responded) as a submission to that call for comments on the IGA negotiations. I meant to post it here, but got really busy and forgot.
I have no real hope that it will affect Jim “expediency rules” Flaherty, but ya gotta do something, right. I’ve got a couple of other things in the works, more later.
Business Income Tax Division
I am writing in response to a call for comments on current negotiations between Canada and the United States over implementation of the US Foreign Account Tax Compliance Act (FATCA) and its implications for Canada.
Under no circumstances should the government of Canada assist the US in any way in the implementation of this legislation. FATCA is by far the most egregious example of a US tendency to pass laws with an extra-territorial reach. While FATCA is portrayed as an attempt to catch Americans trying to evade income tax, in truth it is nothing more than an attempt to impose US tax law on all other nations in the world.
There are about one million people in Canada who have US roots. The vast majority of them are law-abiding, tax-paying Canadian citizens who are either accidental Americans (born in the US to Canadians but left as children, or born in Canada to parents who are US citizens); Americans who left the country decades ago and thought they had surrendered their US citizenship; or former green car holders who have returned home or moved on. FATCA targets these people and attempts to pull them in to the IRS’ tax dragnet. Should the IRS succeed, it will be a significant drain on the Canadian economy.
Also caught up in the FATCA onslaught are Canadian banks, credit unions, and other financial institutions who will now have to spend hundreds of millions of dollars to revise their data systems in order to find out who among their account holders are “US persons.” Those costs will be paid for by ALL Canadian account holders — not just the “US persons” the banks are trying to identify. By negotiating an IGA with the US, the Canadian government would actually be facilitating this significant cash outlay — again at the expense of the Canadian economy and with absolutely no benefit to show for it.
Canada is in a unique position to stop this juggernaut before it does serious damage to both the Canadian economy and the global economy (and ironically, to the US economy as well). Here’s what I recommend:
Bravo! Great letter.
Another excellent letter. Thanks for posting it. There are now two model letters abovfor any Kiwis or Australians to use to write their Treasury officials. I wished there were more down this way that understood what was coming. I talked to my NZ bank ‘personal assistant’ yesterday, and she had just heard the term FATCA, but had no idea what it meant for them, yet!
Yet another Canadian financial institution jumps onto the band wagon of FATCA compliance. Yet another example to cite to your MPs and the Finance Dept. Lets get real here – what are the odds that group retirement plans are full of ‘US taxable persons’ funding druglords, money laundering and terror funding? Yet, the US insists that FATCA must be forced onto Canadian citizens and residents, and Canadian institutions.
Minister Flaherty : Where are your declarations now? Where are your public statements that Canada is NOT a tax haven, and that your fellow Canadian citizens and residents are law abiding, tax paying, honest people? Or, are we being thrown under the bus – as Canada gets ready to capitulate to the US on the 200th anniversary of the War of 1812?
The U.S. Foreign Accounts Tax Compliance Act (FATCA) and your group retirement planDecember 3, 2012
Sun Life Financial = Canadian Capitulation
Here is their twitter account…
Couldn’t resist sending them a tweet or two…
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