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!
Game over?
I just heard on the news that Flaherty’s budget will include “measures to crackdown on tax cheats who hide income in offshore accounts. “
No, although I remain intrigued by what measures exactly Flaherty intends to include and their workability. He can’t seriously think he can implement a Canadian version of FATCA.
Check out this comment on the Globe article:
cmmnsns
6:30 PM on March 14, 2013
According to FACTA banks are not obligated to report your accounts to the US (and by the way its not directly to the IRS anyway its to the CRA who can then share info with the IRS if warranted) if a known American citizen has an account (TFSA/RESP or otherwise) containing more than $50 000, an important fact that the author neglected to mention. As well, it is not illegal to not file US taxes if you do not owe money, and therefore you are also then not beholden to declare your Canadian accounts.
The only group who has much to benefit from needlessly freaking out dual citizens, the average of which are of little interest to the IRS, are the accountants whom innocent people are needlessly paying out of unsubstantiated fear that is stoked by articles such as this one.
My information is largely based on personal research as well as information from a relative who is a well respected American based tax lawyer.
Don’t get sucked in.
@ bubblebustin
I did check out that comment and did my best to reply. Hope I did okay.
@em
That’s odd, there’s no reply to that comment that I can see. I would reply but there are others here who know more about FATCA than I can ever hope to.
@bubblebustin. So why do we need to relinquish?
@Joe Zinga
In case you win the lottery 😉
@bubblebustin. Most have said be safe and relinquish. We have life savings at stake, all retirement funds, house equity etc. so it adds up. We won’t win the lottery. Are we worrying too much about this. A trip to Calgary will cost about $1000 to see the consulate and relinquish. Is this a needless expense?
@ bubblebustin
My reply to cmmnsns at G&B shows up on my computer (click on red “replies). Honeebadger and calgary411 added replies too.
@Joe Zinga
What I worry most about is somehow being forced to spend the rest of my life as a USP under these worrisome conditions. My husband and I had our reasons for wanting to be US tax compliant and as a result we lost a significant portion of our retirement savings in the form of tax on the proceeds of the sale of our home in Canada when we entered OVDI. Any choice you make will have it’s cost, it seems, whether it’s the loss of money, or the loss of mobility. Personally, I don’t want to spend the rest of my life looking over my shoulder and trying to stay one step ahead of the IRS and their ongoing diabolical attempts to make my evermore difficult. There won’t be any divine intervention that’ll make this go away and restore my life to what it was before I took the red pill, so to speak. I’ll take my lumps and be free. Get out of Dodge when the going is still ‘semi-good’!
@Em
I see it now, and it looks good! Thanks. BTW, I’m honeebadger 🙂
@ bubblebustin/honeebadger
Loved your comment — straight to the point. 🙂 Thumbs up!
@Em
Thank you. If anything, honeebadger gets to the point!
Thanks, Tim, for your post at Maple Sandbox:
@The_Animal, it looks like you’ve restricted public access to the “add friend” button, so I can’t click it, but you can add me if you like. 🙂
OK, I will. 😀
I think if you read the Feb. 26th, 2013 committee minutes at the link below, you can see that there have been very recent parliamentary committee discussions about implementing FATCA or a FATCA-like system by Canada, in the context of preventing tax evasion by Canadians, and the ‘tax gap’- “………..pursuant to Standing Order 108(2). We are continuing our study of tax evasion and the use of tax havens.”………..
Problem is that they are focussed only on the question of whether a FATCA, or a FATCA-like structure would solve a Canadian problem. They do not seem to understand or care what FATCA would actually entail for those of us already living our legal lives banking locally and paying taxes in full in Canada – as a result of the unique burden of US citizenship-based tax system superimposed on top of our Canadian compliance – AND that the US is treating our local Canadian accounts the way that Canada might treat accounts in the Caymans. They don’t seem to understand at all the difference between what the US demands and what Canada will get, and that the US taxable persons in Canada have already reported and paid to the CRA – and face additional demands by the US on top of that. They don’t get that essentially, the US is treating Canada as a tax haven, and so our local Canadian accounts are treated as suspect ‘offshore accounts’ – which is ludicrous, but critical for them to understand in order to critique the speakers accurately.
This is why we are having trouble with our representatives of whatever party – they cannot comprehend what this really means, and I think have taken US FATCA claims at face value – which they interpret using the residence based tax worldview that Canada and all other countries use. They cannot see that the US is coming at this from a totally different angle and system.
One of the guest speakers is from the OECD. Only Robert Kepes Barrister and Solicitor, Morris Kepes Winters LLP Tax Lawyers, (appearing ‘As an Individual’) briefly brings up the issue of the difference between the Canadian tax based on residence, and the US system based on citizenship (no matter where we live, and what other citizenship we hold). I don’t see that the committee members understood why that was important. There is a brief mention about Canadian banks complaining about the cost and efforts of implementing FATCA – and passing the costs onto all account holders, but nothing about the effects on the affected ‘US person’ account holders. The questioning skips back and forth between concerns about corporate tax rates and schemes, to implied questions about individuals. There is also the example given that automatic exchange under FATCA would ensnare many of the innocent – ex. snowbirds with a Florida account, along with people actively trying to evade taxes.
Read the whole transcript http://openparliament.ca/committees/finance/41-1/106/?page=13
Finance Committee on Feb. 26th, 2013
Evidence of meeting #106 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tax.
A recording is available from Parliament.
On the agenda
Tax Evasion and the Use of Tax Havens
Committee Business
MPs speaking
James Rajotte
Peggy Nash
Dave Van Kesteren
Scott Brison
Mike Wallace
Guy Caron
Randy Hoback
Raymond Côté
Brian Jean
Murray Rankin
Shelly Glover
Cathy McLeod
Also speaking
Walid Hejazi Professor, Rotman School of Management, University of Toronto, As an Individual
Robert Kepes Barrister and Solicitor, Morris Kepes Winters LLP Tax Lawyers, As an Individual
Claude Vaillancourt President, Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens
Excellency Luis Carlos Delgado Murillo Ambassador of the Republic of Costa Rica to Canada, Embassy of the Republic of Costa Rica
Pascal Saint-Amans Director, Centre for Tax Policy and Administration, Organization for Economic Co-operation and Development Donor Assistance Committee Peer Review Team
Paul Collier Professor, Economics and Public Policy, Blavatnik School of Government, University of Oxford, As an Individual
Clerk of the Committee Ms. Christine Lafrance
We should get a copy of this committee’s report, in order to understand the lens they are using to view FATCA from.
You will find some excerpts from the finance committee meetings at the links below. Enough to give you the flavour of the discussions at least. Overall, not a great deal of concern for the plight of innocent individuals who would be sucked into a FATCA maelstrom which was created in a effort to catch those evil-doing tax evaders, most of whom will buy their way into a lifeboat and sail to other seas.
http://isaacbrocksociety.ca/2013/02/01/parliamentary-finance-committee-discusss-tax-havens-next-tuesday/comment-page-1/#comment-191890
http://isaacbrocksociety.ca/2013/02/13/ctv-will-be-taping-tommorows-hearing-on-tax-havens-in-ottawacockfield-murphy-cba-and-others/
@Swisspinoy Excellent comment. So if officials in the VA and other places you wrote to complain think that anti-discrimination protections do not apply abroad, then they are therefore claiming that the Constitution does not apply to those abroad. The Constitution being the base of all authority in the social contract, the United States of Arrogance thus has no jurisdiction at all abroad!!! Thus these ignorant people you wrote are actually arguing for us!!!
@Swisspinoy @All Would you please Friend me on Facebook? (“Jefferson Tomas”).
@mark twain Excellent!!!
@Petros, Pacifica and the “committee” may we please create a special page for Brockers to list out such constitutional and UDHR arguements from the perspective of all countries so we can have ready access to them? We already have a lot of material spread around various posts, it would be good to centralize it. Maybe we already have a post like that and could create a sidebar link and have everyone put their individual country’s relevant constitutional articles there.
@bubblebustin As to Honeybadger animal video.
This is the way all firm believers in democracy and human rights should be.
@Jeff, If you create it as a post, I can highlight it on the right hand side as a “Our Resources”. That way you can be responsible for maintaining the page.
http://www.youtube.com/watch?v=ychytcVZUsg
How did we get in this situation? Now we know.
@All
For those who did not see this yet (sourcelinks in the text in the version at the link immediately below):
Source: http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=118
FATCA Would Violate the Human Rights of Up to a Million Canadian Citizens: Will We See a “Rand Paul Moment” in Ottawa?
More Trouble for FATCA in China, Hong Kong – and what amounts to a declaration of war from Moscow!
James George Jatras for RepealFATCA.com
March 14, 2013
Washington, DC
Recently the politics of the United States and of the Republican Party got a badly needed shake-up by an old-fashioned filibuster on the floor of the U.S. Senate by Kentucky Senator Rand Paul, instantly vaulting him into a top presidential contender status for 2016. (Also of note, Senator Paul is a prominent critic of FATCA, the “Foreign Account Tax Compliance Act,” and has bogged down amendments to a U.S.-Switzerland tax convention on constitutional grounds raising some of the same issues as FATCA.) Amazingly, it turns out that for some in Washington, constitutionalism, the rule of law, the value of citizenship, and national sovereignty are more than just words.
Shifting our attention to our Friendly Neighbor to the North, is there a “Rand Paul Moment” brewing in Canada, where the rights of up to a million Canadian citizens and the economic and sovereign interests of that country are threatened by a financial “drone strike” by the U.S. Treasury Department?
As detailed by Don Whiteley in the Vancouver Sun (“Compliance with U.S. tax law may violate Charter of Rights”), the “clandestine negotiations” being conducted by the government of Prime Minister Stephen Harper and the Finance Department of Minister Jim Flaherty with American officials stand to violate the most cherished human rights protections of citizens of the “True North strong and free!,” according to a letter from a noted constitutional scholar, Peter Hogg, former Dean of Osgoode Hall Law School:
>>FATCA compliance costs for the world’s financial institutions are astronomical, and Canada’s banks are hoping that the federal government will negotiate an intergovernmental agreement (IGA) with the Americans that would allow them to report data on U.S. citizens to Canada Revenue Agency, which in turn would send it to the IRS. The U.S., to facilitate this approach, has written a Model Agreement to be used as a template for these bilateral tax agreements.
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.”
Hogg’s letter goes on to point out that Section 1 of the Charter allows governments to impose reasonable limits to Charter provisions, but then argues “… any argument attempting to use Sec. 1 to justify limitations on the equality rights would be extremely weak. The objective of ensuring compliance with U.S. tax laws is probably not important enough to justify breaches of the Canadian Charter, and even if it was … the measures contemplated (by the U.S.) are grossly disproportionate to the objective.”
There are about one million people in Canada — the vast majority Canadian citizens — who have connections to the U.S. in one way or another. Some are “accidental” Americans — born in Canada to parents who are (or were) U.S. citizens; Americans who left the U.S. decades ago and thought they automatically renounced their U.S. citizenship when they became Canadians; and border babies — people born to Canadian parents in the U.S. who came home as infants. <>The success of a broad U.S. crackdown on offshore tax dodging will be determined in part by China’s cooperation, but talks with Chinese officials are making little headway, former U.S. Treasury Department officials and tax professionals said.
>>FATCA requires foreign financial institutions to tell the United States about Americans’ offshore financial holdings.
>>One obstacle in the Chinese talks is likely that China wants, in return, more tax information than U.S. officials are willing to share about Chinese citizens who have assets in the United States, accountants and tax lawyers said.
>>China – the world’s second-largest economy – is seen by some tax experts as an important participant if the U.S. Foreign Accounts Tax Compliance Act, or FATCA, is to work effectively, especially in Asia. [ . . . ]
>>China is seen as a critical part of the FATCA puzzle not only due to the country’s own global economic prominence, but also because of its sway over Hong Kong, a major money center.
>>The Hong Kong Association of Banks said in a statement: “FATCA is an issue highly relevant to Hong Kong … We have been and will closely follow relevant developments, in discussion with the Hong Kong Government.”
>>The Financial Services and the Treasury Bureau of Hong Kong did not respond to questions.
>>It was unclear whether Hong Kong may be able to negotiate an IGA on its own with the United States. Hong Kong became part of China in 1997, but retained its own currency and local government. [ . . . ]
>>Foreign countries have pushed, with limited success, for reciprocal information sharing, but generally IGAs have not allowed an equal two-way sharing of taxpayer information.
>>With IGA negotiations in mind, the Obama administration is considering asking Congress for the power to require more disclosure by U.S. banks of information about foreign clients’ accounts to those clients’ home governments.
>>The IRS this year started giving some foreign governments information about interest payments earned by their citizens in U.S. bank accounts. This has already raised privacy concerns. <>Now Russia has stepped up to say implementing FATCA is illegal in the country as the rules are contrary to Russian and international laws.
The Russian Foreign Ministry has also declared that the country’s financial institutions would break local laws if they enter into any agreement with the IRS.
The Bank of Russia has backed up the Foreign Ministry’s stance and said that FATCA undermines the principle of equality among sovereign states.
One of the reasons why is [that there is] no similar agreement for US-based financial institutions to reveal the details of its foreign clients to other governments. <<
This is somewhat surprising, as Russia has earlier indicated not only its willingness to work with Washington on FATCA compliance but to help round up support from the other BRICS countries (notably China and India). In addition, recently President Vladimir Putin called for legislation prohibiting Russian officials from being allowed to hold foreign bank accounts at all, to hinder hiding corrupt assets abroad, and probably would have liked to have reached an equitable deal with Washington. But when it became clear that FATCA is not a bilateral cooperative agreement, no matter how the IGA is dressed up, but a unilateral imposition by Washington on the rest of the world, Moscow correctly concluded that sovereignty and the rule of law must prevail.
Indeed, what appears to be a detailed analysis and commentary by В.Ю. КАТАСОНОВ, проф., д.э.н., председатель Русского экономического общества им. С.Ф. Шарапова (V.Yu. Katasonov, prof., PhD, chairman of the “Sharapov” Russian Economic Society) posted on the Russian Ministry of Foreign Affairs website (on the BRICS page, no less!) reads as Moscow’s declaration of war on FATCA – prepare to be blown away (even in Google auto-translate English!).
Britain, Switzerland: Time for Second Thoughts?
If China (and Hong Kong) and Russia stay firm in putting their independence and sovereignty first, and especially if even Canada willy-nilly does likewise, it’s not too soon to state that FATCA already has been exposed as a failure. The question then would be, how much damage is the U.S. Treasury Department willing to inflict on the United States and on the global financial system in a vain attempt to vindicate this badly misguided approach to tax enforcement? And second, will countries that already have “drunk the FATCA Kool-Aid,” starting with the United Kingdom (the first country to sign a “reciprocal” Model 1 IGA) and Switzerland (the first to sign a “nonreciprocal” Model 2 IGA), realize they’d been “had” and stop action on ratifying the agreement?