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
Ottawa, Canada
K1A 0G5For further information contact:
Kevin Shoom
Business Income Tax Division
613-992-2980
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
Thought I’d pass on for your consideration in your own submissions to Mr. Schoom, the following point that I sent to the PM, Flaherty, and my MP. I think there’s a chance my MP (Paul Dewar, NDP) will sympathize with this; I’m under no delusions about Harper and Flaherty agreeing with me, because as we all know the current Tory party is all about socialism for the 1% and free enterprise for everyone else. My point is, by entering into an IGA to protect Canadian banks from the 30% extortion by IRS of those banks’ US assets, the government is basically intervening in a business decision gone very wrong to bail out bankers who arguably had no business expanding into another country anyway. I don’t recall any banks asking their depositors if it was OK to start parking some of their money into establishing US branches; maybe they asked their stockholders that, maybe they didn’t. Anyway, silly me, I always thought that free enterprise meant government not bailing out businesses. The bank bailouts and repeated Harperite interventions in labour disputes, always on behalf of management, banning strikes before they even started and thereby interfering in the operation of what is supposed to be a free labour market, has disabused me of any notion that our current government even begins to understand the meanings of “free market” and “conservative.”
Here’s what I said, maybe the wording could be improved upon, but I think the point needs to be made.
“I understand there may be penalties against Canadian banks operating in the US if such an agreement isn’t reached. Frankly, that’s the banks’ problem, not Canada’s. They chose to risk investment in the US economy. While US actions against them would be outrageous, it would be even more outrageous if Canadian citizens’ privacy rights and Canada’s sovereignty over its own banking and privacy legislation, and up to a million Canadian citizens, were thrown under the bus in order to protect the banks.”
Help!
I’m having trouble with an argument I’m trying to flesh out for a letter to send re: FATCA as a threat and illegal re Canada’s Charter and other laws – am having trouble finding the bits we’ve already posted elsewhere on IBS. We could also cc to the Canadian Civil Liberties Union, and the Council of Canadians, and any other org.s that have a specific interest in that area (or among others).
Since this is a critical juncture, and because we’re trying to demonstrate how this is relevant to the portfolios of multiple opposition members, (i.e. not only the Finance critics, and not only our own MPs), I want to put in a tailored bit that ties FATCA to privacy, relations, citizenship, disability rights, discrimination, Charter rights, seniors and pensions, etc. When you look at the shadow cabinets, each person has a specific area of focus – ex. privacy rights,.
So, could we start and flesh out a Charter/Constitutional thread to use as a resource for all to draw on? If we collect links to resources too, we can include them in e-mails we send.
Those of you who know more about the Charter /Constitutional issues and have commented more in-depth on them, can you help?
@schubert1975
I think your point is a good and aligns with Moby’s submissions to NZ and Australia. It is not the governments place to bail out the banks business decisions by signing IGAs.
Good one Bubblebustin!
@schubert1975 I broadly agree with your argument, however I think as a point of fact that there is far more to Canadian banks’ exposure to the US than branch operations. I cannot provide a dollar figure, but likely the biggest element of US exposure is holdings of US stocks, bonds, and other passive investments. Every investment house, every insurance company will acquire such assets, either on behalf of clients or in terms of their internal decisions on diversification.
[Received the following]
I would like to acknowledge receipt of your recent correspondence addressed to the Prime Minister regarding the Foreign Account Tax Compliance Act (FATCA).
Please be assured that your comments have been carefully noted. A copy of your e-mail has been forwarded to the Honourable James Flaherty, Minister of Finance, for his information. I am certain that the Minister will wish to give your views every consideration.
Thank you for writing to the Prime Minister.
B. Funes
Executive Correspondence Officer
for the Prime Minister’s Office
Agent de correspondence de la haute direction
pour le Cabinet du Premier ministre
*Remember to send a copy to Kevin Shoom.
*
@joe smith
Good one! I personally always find it a relief when they don’t mention sending a copy to the RCMP, lol.
I suggest that people not stop with just calling and e-mailing their MPs, or the MPs that deal with Finance. Call the MPs who have portfolios re Privacy, and Human Rights and cite the following:
There is an important privacy issue, and here is additional evidence beyond the already damning available reports by the Taxpayer Advocate, http://www.accountingtoday.com/news/Taxpayer-Advocates-Cope-IRS-Tax-Refund-Delays-Identity-Theft-62443-1.html and TIGTA http://www.accountingweb.com/topic/tax/tigta-report-irs-taxpayer-data-vulnerable-hackers and the GAO http://www.bankinfosecurity.com/articles.php?art_id=3431 http://www.bankinfosecurity.com/gao-lack-controls-puts-irs-data-at-risk-a-4595 , that the IRS cannot truthfully say that it adequately protects our banking and personal information including our US Social Security numbers, though the IRS, and FBAR and FATCA laws compel us to give it – and at riske is also the bank acct information of those non-US persons (as in spouses, employers, etc) who are joint acct holders, or are the actual Canadian-citizenship-only owners of the Canadian accts.
Most recently, in a letter the South Carolina Governor Nikki Haley wrote to the IRS….. “As I am sure you are aware, an international hacker recently breached
the South Carolina Department of Revenue’s computer system exposing the
personal information of all electronic tax filers in my state,” she wrote to IRS Acting Commissioner Steven T. Miller. “While this incident
was entirely caused by a malicious criminal hacker, the investigation of
how this breach occurred has unfortunately revealed that the IRS does
not require encryption of stored tax data, only transmitted data.”…. http://www.accountingtoday.com/news/SC-Governor-Urges-Encryption-Taxpayer-Information-Data-Breach-64758-1.html
This issue also applies to all those readers in other countries who have privacy and personal and tax data protection laws. This is a compelling argument against the implementation of FATCA, as well as of the FBAR and other financial reporting laws, and US citizenship based tax reporting – the US and IRS and Treasury demand personal and financial information that compromises our data and exposes ourselves and those who we share accts with – or have merely a real or potential co-signatory role on (ex. employers, charitable/voluntary organizations, power of attorney held for others, etc.). Yet, they cannot truthfully say that adequate safeguards are in place, as robustly and independently established in the US own reports from their GAO (Government Accountability Office) and TIGTA (United States Treasury Inspector General for Tax Administration).
@Badger
Again, great point!
Pingback: FATCA – “I’d Like To Teach The World To Sing (In Perfect Harmony)” – Seven reasons why Canada should NOT enter into a FATCA IGA « Freedom from the tyranny of U.S. citizenship-based taxation for U.S. and dual citizens ou
I received the following response from my email to the NZ Policy webmaster. Unsurprisingly, they are drinking the kool aid. It does seem there will be an opportunity for public submissions at some stage.
“Thank you for your email regarding the recent announcement that the New Zealand Government is looking at negotiating an intergovernmental agreement with the United States for the purposes of the Foreign Account Tax Compliance Act (FATCA). The aim of FATCA is to ensure that all US income is being properly reported so that the tax obligations of US citizens and residents can be calculated. This is because US citizens are taxed on their worldwide income regardless of where they live.
The New Zealand Government understands that the requirements of FATCA may be a burden for individuals, especially for “accidental” US citizens who may have never been to the US. FATCA’s existence and application is a reality, so the main issue is what can be done to ease the burden of FATCA’s requirements given that it is likely to be here to stay.
We believe that the best way to do this is through an intergovernmental agreement (IGA). Without an IGA, all New Zealanders, not just simply dual citizens like yourself, risk facing a 30% tax on certain income and having their account with a financial institution closed down. This withholding may occur directly when dealing with a participating financial institution, and indirectly when dealing with non-participating financial institutions. Having an IGA in place protects all New Zealanders from these risks with respect to their dealings with New Zealand financial institutions. The IGA does not create additional and more cumbersome requirements than what is already in place under the original FATCA regulations.
One of the drivers for an IGA is that under FATCA a number of products and institutions are exempt from FATCA requirements, but this is dependent on them meeting the definition set out in the regulations. New Zealand’s retirement schemes including KiwiSaver do not quite meet the definition. Annex II of the IGA may allow retirement schemes such as KiwiSaver to be exempted from FATCA. The current focus of the working group is to consider what schemes we should attempt to have included in Annex II.
Legislation implementing the IGA will be subject to the usual parliamentary process, including consultation and the opportunity for public submissions. The IGA text will be finalised through bilateral negotiations. The main body of the text is very likely to be based closely on the recently signed UK/US IGA, although Annex II will be New Zealand specific. This can be found at:
http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx
“
@Osgood- Drinking the kool-aid indeed. They obviously don’t get it at all. FATCA is not an “OBJECTIVE” truth. You have to help make it a reality by agreeing to it. Otherwise it is no more true than is a work of fiction. Without cooperation from the other countries there is no FATCA.
Why would any country want to be a part of an agreement where the Americans get to write the rules. Can’t they see that any accomodations that are made to different countries are purely a strategic move that is engaged in to serve a U.S. dictate? And the idea that any country should be able to divy another coutry’s population according to citizenship is a contravention of notions of natural justice.
FATCA is totally unenforceable without coopertation from other nations.
@Osgood, this is pretty sad that Foreign governments think they can’t just say no. That 30% witholding is coercing everyone. I think that what needs to be highlighted in our correspondences to our governments is our the US does not intend on fullfilling reciprocity. We need to forward them the secretary’s letter which proves that the burden will be one sided and that no extra regulation will be imposed on American banks.
Does anyone knows if Treasury alone can impose additional regulations on banks, or does this have to be voted by Congress and the Senate?
@Osgood
Well, I guess I have come to expect this. New Zealand is not going to be a profile in courage and stand up to the 800 lb gorilla who wants their bananas!
I sent your response directly to Moby who lives in NZ, as I wonder if he sent a version of his submission to Australia also to the NZ treasury, as it shows as clearly as any document why a country should NOT sign an IGA.
If you have not seen it or read it, here is a copy.
I do see a certain amount of clarity related to the impacts of FATCA on Kiwis, and basically they have made the decision that in spite of that, they will comply.
I do note, that they are not kidding themselves that this would reduce compliance workload burden, but they justify signing as a way of reducing the risk for all Kiwis with the threat of accidental 30% withholding. They don’t seem concerned that this adds burden to their Treasury who now becomes an intermediary. They probably will have to hire staff just to deal with mounds of data they will be receiving from all FFIs. Anyway, what ever the shifting of burdens, they are happy to throw their accidental Americans under the bus, as just a mere inconvenience if it can somehow be seen as protecting other Kiwis.
I do note, they did not mention anything about the ‘so called’ reciprocity benefit, and trust they are not kidding themselves that they will get anything.
Basically, for the accidental American, or dual citizens, the message is clear that you have to take steps to get rid of that issue on your own, and Treasury is trying to save all other Kiwis.
I do see that they mention the Kiwi Saver as one of the mains reasons they want the IGA. Like Australia, with their ‘Super’, I figured this would be the major issue driving their IGA decision. They could not get any exception in the standard FATCA in spite of this single page submission with cover letter from their very pro American Ambassador, Mike Moore. That was his only ask, and he was sooo grateful for the opportunity to submit it. Yet he was rebuffed and got nothing!
So now, hat in hand,, if they can get Kiwi saver exception in the Annex II to the IGA, then that seems to trump everything else for them. In fact, their minds seem locked into a “We must comply” mind set, and so the focus of the working group is just to figure out what they want in the annex II.
So if they enter a so called bi-lateral negotiation with a capitulation mind set, I not sure there is any hope.
BTW, I will be back in NZ on the 28th, we should get in touch. Somewhere we need to find a Kiwi politician who is incensed by this assault on New Zealand sovereignty, as no one in Treasury as any moral qualms about any of this!
@Christophe
Re Ur “Does anyone knows if Treasury alone can impose additional regulations on banks, or does this have to be voted by Congress and the Senate?“
The answer appears to be Yes, they can, unless Congress takes separate action to reign them in. There is no automatic ‘advise and consent’ process on these IGAs.
Tim and Jim spelled that out pretty clearly here.
@Osgood.
But if is the state of understanding in Wellington, it is depressing indeed. Just on obvious factual questions, the level of comprehension is pathetic:
“FATCA’s existence and application is a reality, so the main issue is what can be done to ease the burden of FATCA’s requirements given that it is likely to be here to stay.”.
Sez who? Where to these people get off with their a priori and self-fulfilling certainty that Fatca is like an act of God? Astounding.
“Without an IGA, all New Zealanders, not just simply dual citizens like yourself, risk facing a 30% tax on certain income and having their account with a financial institution closed down.”
Do they not understand that the 30% withholding applies to “recalcitrant” *institutions*?
“The IGA does not create additional and more cumbersome requirements than what is already in place under the original FATCA regulations.”.
Translation: an IGA won’t inflict any worse on NZ than what the Yanks already threaten (not yet “in place” til at least Jan 2014) to do to NZ.
” New Zealand’s retirement schemes including KiwiSaver do not quite meet the definition. Annex II of the IGA may allow retirement schemes such as KiwiSaver to be exempted from FATCA. The current focus of the working group is to consider what schemes we should attempt to have included in Annex II.”
Translation: we are abjectly begging our lord and master in Washington to please please please give us a break on KiwiSaver, but they are thus far impassive as it doesn’t meet their qualification for exemption, on which they alone in their infinite and merciful wisdom will pass judgment. We still hold out hope that they will relent and deign to include KiwiSaver on Annex II. But even if they don’t, we’ll sign the IGA anyway and thank them for their generosity to our unworthy selves.
Just plain sad.
@Just Me
Thanks for your insightful comments. I completely agree with everything you have to say. The threat of the 30% withholding sanctions appear to have completely spooked the NZ government (and many others) to just roll over and comply with the bully’s demands. This is nuts, if any other nation on the planet pulled this stunt they would be told where to shove it.
I want to make a submission in the remnants of spare time that I have, but it seems certain to fall on deaf ears. I particularly note your comment:
“Basically, for the accidental American, or dual citizens, the message is clear that you have to take steps to get rid of that issue on your own, and Treasury is trying to save all other Kiwis”
Not even our own government can be called upon for help. How utterly sad that this has happened.
@Just Me @ Osgood
I fear Australia will go down the same path. My observation is whenever the U.S. tells Australia to jump, the response is “how high”?
@Rose..
Australia will definitely go down the same path. They have abandoned all country sovereignty to the Yanks now that they have let the marines into Darwin. Gillard is in love with Obama and of course Johnny loved Bush.. Paul Keating seems to be one of the few that wonder why the federal government is eroding Australia’s foreign policy influence by clinging to the United States alliance at the expense of relations with key Asian neighbours.
Australia is just becoming another quaint little out post of the America Empire, so if America wants FATCA, but of course they will give it to them!
Read more: http://www.smh.com.au/opinion/political-news/us-alliance-comes-at-cost-of-regional-status–keating-20121114-29ck0.html#ixzz2DECqtwJD
I find it hard to believe that the NZ government would cite the possible future exemption of KiwiSaver as a driver for agreeing to an IGA. That strikes me as unbelievably naive. While it’s true that some products are currently exempt from reporting on the part of financial institutions (my UK ISA) and some institutions are also exempt (building societies in the UK) they certainly didn’t appear to be exempt on my 8938. Does the NZ government really think that a product not currently exempt will be exempt in the future? I would have thought that the reverse (products and institutions currently exempt will not be exempt in the future) is the more likely goal for the US. If the long-term objective of the US was to have a subset of non-reportable products and institutions, they would have exempted them from individual reporting also.
@Edelweiss
Well, when you look at the exemptions that the UK IGA has, it is the type of thing that I assume NZ wants, and when you look at the government appeal, it was only about the Kiwi Saver.
They are amongst the UK exemptions.
I. Exempt Beneficial Owners
Any pension scheme or other retirement arrangement established in the United Kingdom and described in Article 3 (General Definitions) of the Convention, including pension funds or pension schemes covered by IRS Announcement 2005-30, 2005-1 C.B. 988, on the Mutual Agreement on U.K. Pension Agreements.
III. Exempt Products
Here is a complete list of IGA annex II convenient comparisons so far.
http://www.fsitaxposts.com/2012/11/22/annex-ii-comparison/
When you look at how complex these IGAs are getting with all the exceptions / deemed compliant categories, the IRS is going to need an army of Contract administers just to keep up with what they are agreeing to. Then there is the issue of auditing, and whether or not, in a real world, any of that will happen. I look at this, and say to myself, if I am determined to hide money, I bet a good tax attorney or CPA who is a ‘regulation engineer’ can find a way to get me into some of these that will have no reporting requirements.
Finally, I find this exceptions amusing… The GATCA creators exempt themselves
*Just Me, sorry, but I’m clueless about all of this legal chatter not designed for common folks who could get majorly fined for not understanding this stuff, and it gives me a headache. Yet, if I understand it correctly, these items are exempt from FATCA reporting requirements, but not FBAR and double-taxation?
@Just Me
Thanks for the article. I believe you are correct that Australia is becoming another little outpost and it disturbs me to see those marines permanently stationed in Darwin. I do hope Paul Keating gets more publicity and stirs up some decent debate on this subject. Perhaps he could throw FATCA into the pot as well and get some proper press coverage on that issue. Or does he even know about the looming FATCA agreement?