Thanks for sending the Green Party announcement regarding the U.S. Foreign Account Tax Compliance Act (FATCA). I have asked our National Revenue Critic, now Murray Rankin, to fill me in on the latest.
The NDP is very concerned that the Harper government is currently participating in negotiations with the US over an Intergovernmental Agreement (IGA) for the implementation of FATCA in Canada. As you know, such an agreement would likely require Canada to enact laws and regulations that would require Canadian financial institutions to comply with FATCA. The NDP has serious concerns both about the lack of transparency and consultation during the negotiation process and the potential infringements on the rights of Canadians.
If implemented, the IGA would likely require Canadian banks, investment funds and other financial institutions to disclose annually to the U.S. Internal Revenue Service (IRS) accounts held by American Citizens, which includes dual citizens in Canada. Failure to disclose account information could result in a withholding tax applied to U.S. income earned by the institution or by account holder. The US’ stated policy goal of FACTA is to aggressively target American citizens who are improperly shielding assets in offshore accounts, with no consideration of the nature of existing Canada-US tax cooperation and the fact Canada is by no means a tax haven for Americans.
Essentially, FATCA would allow the United States to bypass the exchange of information between the IRS and the Canada Revenue Agency and instead get information directly from Canadian financial institutions. Apart from the extraterritorial enforcement dimensions to FACTA referenced above, there are widespread concerns that this exchange of information could potentially violate existing Canadian privacy laws.
New Democrats have repeatedly raised concerns over FATCA with the Conservatives and demanded that the government act on its responsibility to protect Canadian citizens from this improper and unreasonable intrusion of a foreign government.
New Democrats have also been fighting for the Conservatives to finally get serious when it comes to tax havens. But this does not mean rolling over and playing dead in the face of a misguided effort of the US to, in effect, treat Canada as a tax have. Just as we believe the Canadian Government has a responsibility to protect Canada’s tax base, we understand the United States’ desire to protect their own tax base — but this cannot come at the cost of the rights of individuals in our own country. We are demanding answers and transparency from the Conservatives on FATCA, and will not support an agreement that violates the privacy rights of individuals.
Again, thanks for contacting us on this. Please be assured that my New Democrat colleagues and I will continue to stand up both for fair taxation and for privacy rights, as well as for an approach to tax havens that is both aggressive and, unlike FACTA, reasonable.