But a major obstacle to all this is Canada’s Charter of Rights and Freedoms, which prohibits (Section 15.1) discrimination based on several criteria, including “national or ethnic origin.” Constitutional expert Peter Hogg has pointed this out in a five-page letter to the Finance Department, which is co-ordinating the IGA negotiations with the US.
“In my opinion, the procedures mandate by the Model IGA are discriminatory in a way that would not withstand Charter scrutiny,” Hogg says in his letter. “These procedures effectively treat individuals differently, and adversely, based on an immutable personal characteristic, specifically citizenship. If Parliament were to enact legislation authorizing and permitting this type of differential and adverse treatment, the legislation would contravene the equality protections in section 15 of the Charter.”
Opinion: Creating tax misery for nearly seven million U.S. expatriates
By Don Whiteley, Special to The Vancouver Sun March 12, 2013
This really should not be a post by me but am so excited by this, had to at least share the link. Tim mentioned over at MapleSandbox that something good would be coming in the next few days and to keep an eye on Vancouver Sun. I went over right away, and there it was!
Thanks to all for the comments. One significant clarification (should have worked it in) — Peter Hogg’s letter does indeed make the link between national origin and citizenship:
“Note that the prohibited grounds of discrimination include ‘national or ethnic origin’, and the Supreme Court has held that citizenship is an “analogous ground” also prohibited by S. 15.1 (Andrews v. Law Society of BC (1989) 1 S.C.R. 143).”
And I don’t think lack of an IGA lets the banks off the hook for any of this — I’m sure they are terrified that they’ll be hung out to dry. Hogg also argues that if Canada wants to sign a tax sharing agreement with the US it would fly (Charter-wise) if it applied only to accounts in Canada held by US residents. That of course gives the Americans nothing more than they already have in the existing tax agreement; but it would let a million or more folks here breathe a lot easier.
Personally, I think Ottawa has to do much more than simply refuse to sign and IGA — it has to let the Americans know that there will be some form of retaliation if they impose that 30% cut on US-origin transactions. That would take some guts though.
@ Arrow
There was one thing I spotted in your article — “U.S. persons (someone who had a green card)”. It is the use of the past tense I’m wondering about. If a person no longer has a green card, is it really possible for he or she to be a U.S. person? Anyway, thank you very much for writing this excellent article and giving us something more like a branch to grasp instead of all the straws we seem to have been reaching for up until now.
The Vancouver Sun article is great. I hope it wakes up our politicians and the media. However even without FATCA there is a problem. There would still be the annual tax filing requirement as well as FBAR. Without the Canadian Government or banks forwarding information to the IRS, the risk of being identified is less but not eliminated. Can one feel safer in not worrying about relinquishing? A couple of years ago on our way to the US and when using her Canadian passport to get through the NEXUS kiosk she was denied by the machine saying that she must travel on a US passport. She has been a Canadian citizen for 35 years and has never had a US passport, although was born in the US and has never filed tax returns. Can she now rest easy? I doubt it because the tax laws re citizen based taxation have not changed. There is the ongoing risk that they could still ‘get you’, or am I wrong and going through needless worry?
@Em
I should have been a little clearer on that. As far as the US is concerned, if you had a green card and never formally surrendered it, you still have it. This fits me to a T. I had a green card and abandoned it in 1969 — but I never actually did anything about it, other than putting it in an envelope with my draft card and mailing it to the Selective Service Board (I never heard back).
Lawyers differ on this. The one I went to said I abandoned the card so long ago that it is no longer valid (within a week of coming to Canada, I had broken 9 of the ten green card commandments, and broke the tenth 6th months later when I didn’t make my “annual” report). But another lawyer I talked to thought that until you formally turn it in, it’s still valid.
This is just another American rule that is designed to work for them no matter what. If you break those green card rules, the card is no longer valid, BUT — if you don’t formally surrender it, the IRS says its still valid for tax purposes.
@Joe
Her only protection is to get the CLN, or don’t cross the border. Whatever you do, do not let them bully her into getting a US passport. There are some genuine tragedies on this site of people who did that and are now paying a terrible price for it.
You are correct that Canada refusing to cooperate on FATCA doesn’t do anything about citizenship-based taxation. But if we’re all lucky, she won’t have issues with her own Canadian bank. You wife’s circumstances are identical to my wife’s — and she got her CLN just before Christmas. Haven’t tested it yet.
Green card holder are still considered US persons until they officially file form I-407 and form 8854 to the IRS if you have held the card for more than 8 years. I am assuming most of them don’t, even if the green card expires after they went home, making them still liable for US taxes.
Phil Hodgen has a blog post about the timing of abandonning a green card with regards to being subject to the exit tax.
http://hodgen.com/london-embassy-turnaround-time-for-green-cards/
And while looking up that piece of information, I actually found this official document dated from 2006 on the IRS web site, titled “Basic Tax Guide for Green Card Holder”. I wonder if they now give that document when you receive your green card. I certainly never saw that document until today.
http://www.irs.gov/pub/irs-pdf/p4588.pdf
I quickly went through it. They clearly mention that you have to file US taxes even if you live in another country. They talk about surrendering the green card and the need to file form 8840.
And the conditions in which you must still file taxes form 8840 for 10 years after you surrender your green card.
Note that there is no mention whatsoever of FBAR.
I was contacted by the Globe and Mail today, I had posted a comment on an article in January http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/us-expats-in-canada-face-new-obamacare-health-care-tax/article7372249/
They are doing a story in the personal finance section about the impacts and feelings about the tax issues facing people with ties to the US are facing. I have my relinquishment appointment in Calgary on May 8th, so feel somewhat vulnerable about speaking with the media until I have a CLN in hand, however I feel so strongly about the issues that I have consented to an interview.
I gave the reporter some recommended reading:
1. This website
2. maples sandbox website
3. Michael Miller’s recent article
I will also recommend that she speak with a range of people who are impacted in different ways – and will explain some of the different categories of circumstances that people are facing.
@lagoon
Excellent!
@Lagoon
That’s great — who is the reporter?
The more media get into this, the more likely it is the government will recognize what a landmine it would be if they signed an IGA. We can only hope.
@arrow, the reporter is Roma Luciw.
She was able to contact me because I had posted a response to the article, and it was a couple of Brocker’s responses to my post that led to find this site.
So, the lesson I take away is that while it is good for us to be in dialogue here, it is helpful for us to respond to all of the media articles about the issues
@lagoon, if I may, I think to close the loop and get the complete picture, the reported should also touch on the impact of FATCA on Canadian green card holders living in the US.
What’s going to happen to the non-compliant ones if the IRS gets their info? Force them into a OVDI like program forcing them to surrendering 27.5% of their Canadian accounts? Ruin them with FBAR fines? Charge them with filing a false tax return which is going to result in their deportation?
@ chris, there are many on this site who are more knowledgeable than I am, and so I will certainly make your points, and hope that her own read of this site may lead her to interviews who can speak to the depth and breath of the issues
@ Arrow & Chris
Thanks for that information. I am still in limbo (sent away an I-407 but got no response). However, years ago I decided to not go to the USA again and I didn’t and I won’t so cross-border drones are the only option for them now. As for my bank, I am Canadian born and do not have a green card, period. Any chance, Arrow, that you can get your green card back and then send it off again with the I-407? (Just kidding … that of course is beyond all reason.)
@ Lagoon
Thank you from all of us. We understand the tenterhooks of not yet having your CLN yet.
@Lagoon, it is good to hear that the Canadian media might be paying attention to the comments. The US media, on the other hand, often leaves the impression of being a black hole of emptiness that sucks words away into non-existence.
New media release from Elizabeth May and the Green Party of Canada.
http://www.greenparty.ca/media-release/2013-03-13/implementation-fatca-likely-unconstitutional-says-leading-constitutional-ex
@Tim
Thank you. I see that the Green Party has linked to the full text of Hogg’s letter. He limits himself to s.15 of the Charter, but has pointed out numerous other areas that are highly problematic, including the fact that certain financial institutions are under provincial, not federal, jurisdiction.
Quite apart from the issues with our rights and freedoms as well as the constitution, how is it that the IRS can consider any joint account an American account, where the non American partner has contributed substantially to the account, and who is also trapped in the penalty and tax liability. This is incredible imperialistic overreach. It is a facet of this that should also be emphasized to our MPs and the media. It is outrageous.
@Joe Zinga
Imperialistic overreach, indeed. I closed my joint accounts because of it, rather than accept this overreach. She had direct deposits going to that account, and she had to go through the hassle of transferring those deposits into her new sole account, all because I had to protect her from my own government.
That is bullshit! But more than that, I feel violated, strongarmed, and so does my wife, and all because of FATCA.
@mjh. This overreach includes house equity, RRSPs, tax free savings accounts, joint investment accounts, bank balances, the whole spectrum. And changing/ shifting the accounts may not help because they want to know the history and highest balances over time in all accounts. It surprises me that the Canadian government could give any consideration to this nonsense! Have they read the fine print in the rules published in January?
@Joe Zinga
I’ll have no problem going stateless if that’s what it ultimately takes to protect my spouse from the USG, and if the issue is forced, I’ll tell the US consulate that my allegiance was lost once they’ve attempted to violate my wife’s rights regarding FATCA. She is a Canadian in Canada, and her financial business is none of their business!
Can someone confirm that Peter Hogg is saying that *both* Model 1 and Model 2 IGAs would run afoul of the Charter? I ask because in a Model 1 the government would be involved in the discriminating, but in a Model 2 only the financial institution would be.
TIA
@Tim,
thanks for sharing the link to the Green Party news release, and Peter Hogg’s letter, most informative
@Lagoon,
Thank you for agreeing to the Globe interview. As I am also waiting to complete my relinquishment file and obtain the much coveted CLN, I really do appreciate the position you are in regarding the interview. However, I feel quite certain that the Calgary consulate, where I know you are going will treat you with professionalism and all will go well.
@Arrow
Thank you so much for continuing to write about these issues. These facts need to make their way into the mainstream of the ‘unaffected’ in order to hopefully make our government see that they can not buckle under to the Americans.
Why is no one commenting on the Vancouver Sun issue?
Few comments implies no one is interested, which is not the message we want to send. I am thinking it is because everyone is afraid to publicize their name. I know that at my bank there are pages of people with the same name as me.
If you are really paranoid, you can always quickly create a Facebook account with a pseudo name. 🙂