Honesty is the best policy when it comes to #offshore bank accounts http://t.co/Qr4qyQwNYm – Compare Canada's rules to US Mr. #FBAR
— U.S. Citizen Abroad (@USCitizenAbroad) August 23, 2013
An offshore account may seem like an intimidating prospect, and one that could lead to trouble if it isn’t done right.
But experts say that as long as you follow the appropriate reporting rules set out by the Canada Revenue Agency, offshore bank accounts can be a practical and, in some cases, necessary way to deal with your finances.
This article is very interesting because it confirms that there are actually legitimate reasons for a Canadian resident to have a bank account outside of Canada. Also, the reporting requirement is not triggered unless the account has a $100,000 balance.
Also compare the FBAR penalties to the penalties in Canada.
This would be a good article to comment on. Strike while the iron is hot!
Note: The article is behind the paywall. Here is the author and title:
Honesty is the best policy when it comes to offshore bank accounts
Romina Maurino
TORONTO — The Canadian Press
Published Friday, Aug. 23 2013, 12:05 PM EDT
Last updated Friday, Aug. 23 2013, 4:43 PM EDT
Golombek’s trolling for FATCA reciprocity business.
Originally posted at Maple Sandbox on August 10
Canada Revenue has recently changed it’s Foreign Income Verification Statement to include far more information than previously required. The form T1135 is the Canadian equivalent of FBAR, but far less intrusive. For example, account numbers are not required.
Here are a few links
http://www.moodystax.com/the-devils-in-the-details-the-new-form-t1135-is-released/
http://www.bdo.ca/en/Library/Services/Tax/pages/Tax-Alert-Changes-to-Foreign-Income-Verification-Statement-Form-T1135-Some-Good-News-and-Some-Bad-News.aspx
You can compare the new form to the old one, which I don’t believe had changed since it was first issued.
http://198.103.185.14/E/pbg/tf/t1135/
And in response to a comment by Schubert…..
T1135 applies only to those who are considered to be Canadian residents for tax purposes, This would include Canadian diplomats and members of the Canadian Armed Forces serving overseas.
Also the penalty regime is vastly different.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/frgn/pnlts_grd-eng.html
Basically, a person would have to have deliberately failed to file the form to be hit with a gross negligence penalty. And even those penalties pale in comparison to FBAR.
There’s many other differences between T1135 and FBAR. Maybe we’ll call T1135 “FBAR very, very lite”
I left out the last line in my response to Schubert, who had made some excellent points in response to my post.
“Even the Harper government has more sense than the U.S. government.”
Comment? Done! I didn’t see any paywall. I took a little jab at the tax compliance industrial complex. Although the Canadian reporting form (T1135) will be a bit different next year it still doesn’t invoke the fear factor like FBAR or 8938 do.
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/honesty-is-the-best-policy-when-it-comes-to-offshore-bank-accounts/article13933917/comments/
This isn’t necessarily directly relevant to this thread but is a thought relevant to all “US persons” living–or about to live–abroad with US tax issues.
I don’t want to scare people any more than they are already scared :(, but the next step in enforcement for the US–if the current enforcement-based mindset continues–is that the US might start enforcing the requirement to file Form 1040C–the so-called “Sailing Permit”. This is a tax return that is required before an “alien” (non US citizen) can legally leave the USA–basically it ensures that they have paid all US taxes due up until the day of departure.
This requirement has not been enforced in decades. US citizens are exempt, but if the current trends continue, I would not be surprised to see it being the next step in enforcement. Former US citizens with a CLN, snowbirds, departing US green card holders–anyone suspected of being a “US person”–could be barred from leaving the US after a visit until they’ve settled up with Uncle Sam.
Short term tourists are also exempt, but note that visitors staying over 90 days are expected to file the 1040C. Note the length of stay required to trigger 1040C filing requirements is less than the minimum stay to be declared a US resident for tax purposes.
Like I say–there is no sign of this being enforced–yet–but this could be the next step.
Also note that the US equivalent form is to be sent to the Financial CRIMES Enforcement Network–whereas the equivalent Canadian form is not so designated. This difference is largely symbolic, as likely either country’s form could be used as evidence to prosecute a crime if it is filled out fraudulently. However, it shows a stark difference in the attitudes of the two countries, because the US is essentially blatantly accusing anyone with money in an “offshore” account of being a criminal until proven otherwise. It would be literally equivalent to a police policy of pulling over literally ALL drivers of a certain skin color–letting them go if there is no evidence of a crime, but only after the police are sure there is no evidence of a crime.
@Dash,
Good analogy, that is why I consider the FBAR and FATCA to be the equivalent of a stripsearch – without cause, without evidence, without due process. The FBAR and FATCA reporting for individuals is an annual stripsearch, and the FATCA reporting on account holders by our banks and financial institutions is like a stripsearch and body cavity search – sans warrant, sans cause, sans evidence, sans due process – and all applied to what are legal, local, and primarily post-taxed wages, savings and assets.
No US resident would willingly allow that. And we are being forced to agree to be subjected to that for the rest of our lives? And as extraterritorially applied (under FBAR) to the non-US accounts of non-US spouses, employers, community and charitable organizations, and the non-US estates of others (via POA)?
Our home countries and country of non-US citizenship should be ashamed to collaborate in such an invasive, egregious and unjust treatment on non-US soil.
The government is not allowed to stripsearch and search our bodies, our homes, our cars, and place of business without a warrant and without sufficient reason and evidence to suppose that a crime has been committed. The only basis given by the US for the FBAR and FATCA stripsearch is our US citizenship and ‘taxable person’ status and the non-US location of our locally generated and held assets.
The OECD is pushing for every country in the World to do these automatic information Exchanges. Europé just considers FATCA to be the step that they didn;t take first.
@brockers.
fascinating that “canadian FBAR” is much less intrusive.
chilling on 1040-c , i had no idea that such a beast existed.
agree that enforcement of 1040-c is next logical step.
further logical extension of “enforce at all costs mindset”
those of us with no criminal exposure (AKA minnows) who did quiet filing of 5 years to be able to check off on the 8854 tax compliance requirement may have any number of open years on which we could be hung if USG gets nasty.
solution: don’t visit the US ,your friends and family have to come to UK or Canada or wherever.
i could cry but it would be with despair. instead I laugh because when my CLN arrives and my 8854 is filed i will be FREE and I can turn my energies to supporting Brockers, ACA, AARO, etc
That’s strange I got moderated at the Globe and Mail — first time. I was just responding to a ban offshore accounts, put them in prison, take away their citizenship, comment. Does my response sound offensive to anyone here? Oh well, maybe it will pop up later.
Did you miss what happened in Cyprus? There are some Cyprus residents right now who wished they had kept some of their savings offshore, even at zero percent interest if need be. Did you miss the fact that the Canadian government has a plan to protect the big banks here with “bail-ins” should they ever get themselves into a jam? Technically it’s a confiscation of assets but then so are taxes. Companies and individuals cannot be blamed for not wanting to put all their eggs into one basket. It’s not illegal to have an offshore account and at least for individuals it’s not too difficult to report these accounts to the Canadian government (form T1135) and then pay the appropriate Canadian taxes on their “worldwide” earnings so absolutely they should be doing just that. However, I don’t think demonization is fair when it comes to companies or individuals making perfectly reasonable decisions to place some of their assets outside of Canada.
http://www.globalresearch.ca/the-confiscation-of-savings-in-canada-cyprus-style-bail-ins-proposed-by-ottawa-government/5329263
Hi, Em.
Was it the Globe and Mail or Global Research? Scary article — it should be featured in the Globe and Mail.
@ calgary411
My comment was in the Globe and Mail (the title of this thread) and that Global Research link was part of my comment to illustrate my “bail-ins” point. Maybe it was the link they didn’t like. If it still isn’t there tomorrow I may try again without the link. I certainly don’t think I was being abusive of the person who made what I thought was a pretty uniformed statement.
That story now shows “0” comments, Em. Were there many before?
Your response (to another comment which is also now gone?) sounds just fine!!
@ calgary411
Still showing 10 comments on my computer. Internet imps at work perhaps?
Em,
The article now shows 11 comments as I just threw one up there. I don’t know why it previously showed “0” — or why your comment would be in moderation?????
@ calgary411
I just read your comment (and up arrowed it BTW). I posted my reply again (no Global Research link this time) and it appeared almost instantly. Just another fun day at the keyboard. I guess moderators can fall asleep at the switch sometimes. 🙂
ALERT: The Globe and Mail put up an article yesterday titled “Half of Canadians say government online snooping ‘acceptable’: poll”. Great, I thought, a chance to express my concerns about privacy and use FATCA as an example. Trouble is, G&M has gone all moderator mad and after 2 attempts to post my comment, nothing has appeared — yet. I just thought I’d let Brockers know that the Globe and Mail which might be heading towards a paywall is definitely not conducive to commenting so it’s probably not the best place to try to educate John Q. Public about US tax tyranny. For anyone interested, this is my (so far) unposted comment (perhaps to saucy for G&M?) …
Privacy is as essential to a healthy human existence as shelter, food, water and air. My survey reply would have been a resounding, in bold, exclamation marked NO!!!! Online snooping and any other kind of surveillance of a general populace is absolutely, totally unacceptable. You have to grasp the concept of the panoptica society to understand why. You have to reread “1984” to understand why. You have to listen carefully to what Edward Snowden has been trying to tell you to understand why. You have to be an American living in Canada (or anywhere else outside the USA) to understand why. (BTW, I am not.)
To explain that last point … Because the USA uses citizenship based taxation (CBT) all Americans everywhere in the world are taxed by their homeland (Sieg Heil Amerika!). Along with this until death (or renunciation) do they part, tax filing, obeisance comes the form called FuBAR (oops FBAR) which orders all “overseas” (yes that means Canada too) Americans to reveal all the details of their financial assets (i.e. account number, maximum amount in the account, name and address of the bank or other financial institution). This includes accounts Americans have signing authority over (e.g. joint accounts with their non-American spouses, company accounts, volunteer organization accounts). Banking privacy be dammed. Uncle Sam demands to know what they’ve got and where they keep it and dispenses $10K penalties for errors or omissions. Okay, so that is not surveillance per se (the information is “volunteered”) but it gets worse. Now with FarTCA (oops FATCA) legislation the USA is demanding that all foreign financial institutions (FFIs) in the world report to the IRS all the details of all American held accounts. There’s a 30% withholding penalty if they do not comply (Sieg Heil Amerika!). And this IS surveillance even if it is overt rather than covert, a financial panopticon prison so to speak, and the FFIs are spending billions of dollars to modify their computer systems in order to become agents of the IRS. This is but one sad saga about the sadistic lengths that a surveillance obsessed state like the USA will go to in order to keep its diaspora under control (Sieg Heil Amerika!). Things aren’t too good for the homelanders either.
The American system of surveillance, at home and abroad, is not what I want for Canadians and if the apathy continues it is where we are all headed; if we’re not halfway there already. It’s not terrorists or criminals which scare me; it’s the increasing control over our lives that government claims under the guise of “protecting” us. Give them internet surveillance and they will soon be watching every aspect of our lives — our money, our medical records, our travel destinations, our circle of friends. The more they know about us, the more they can control us and that’s not a normal, healthy human existence as far as I’m concerned. Shame on the 4% who said online snooping is completely acceptable.
@Em
Great comment – assume that you have signed up for an account to comment?
@ USCitzenAbroad
Thanks and yes, I’ve commented there before and have no trouble logging in. This moderation thing is very recent.
There is a, I think, 10 article limit per month for reading G&M articles. I’ve gotten in under the line a few times and been able to place comments. I can open the G&M main page and pick very carefully what I might want to comment on and thus open to read. I’m always given a warning when I have 5 articles or less that I’m allowed for the month. Used to be able to open and read through Google News; however that avenue has closed as it has for the Calgary Herald and related publications, the Calgary Sun and related publications, the Financial / National Post. Until there is some decent journalism, I’m not aiding and abetting, though I and others like me may be the cause of the demise of Canadian (and other journalism). If my $$ were unlimited, it might be another story.
And, yes, Em: another great comment. Hopefully, it will fit in somewhere along the line.
@ calgary411
I believe I was under the limit but that might have been a factor. New month in 2 days so I can test that out. The MSM will do themselves in with their restrictions but I’m more of an alternative reader anyway.