Here’s an excellent article from the National Post.
27/09/13 5:23 American expats feeling less free as draconian tax law kicks in
Here’s an excellent article from the National Post.
27/09/13 5:23 American expats feeling less free as draconian tax law kicks in
I posted a comment and hope other IBS members will as well. With regard to the upcoming protest – I wish I was a Canadian and I would be there 🙂 Go Canada Go! Canada is a key nation in this fight as we all know!
Done. I notice Atticus was there before me. Go for it, folks. This story is good, but it isn’t complete enough. Canadian readers whose first encounter with FATCA are this article need to know more, and we can provide more information in our comments (I doubt they’ll allow cross-links to this website, though I confess I didn’t try). I focused on the accidental-American angle, Atticus on the Canadian-spouse-effect angle. There are other angles — don’t be shy, swarm over there as soon as you can and add your contribution.
forgot to add, this is another first-class opportunity for us to educate our fellow Canadians (most of whom, unless they are of US origin, have little or no idea yet of what’s happening). That will add to our leverage over our politicians, I hope. Someone else should mention that all Canadians will pay for this insanity through higher banking fees and higher federal taxes to pay for the significant administrative expense of any Canadian complicity with FATCA. Which of course the United States of Piracy isn’t about to pay.
Blaze has a post on this at Maple Sandbox. I was unable to leave a comment.
http://www.reuters.com/article/2013/09/27/usa-tax-fatca-idUSL2N0HN15T20130927, “U.S., Panama in talks on tax evasion pact -Treasury”
Time is a wasting for our current government to really lead on the matter of what FATCA coupled with US Citizenship-Based Taxation will do to 3% of its ‘US Person’ citizens and residents. Perhaps it is up to those who will be bidding for the opportunity of being elected to get this in front of ALL Canadians. Come on, Canadian media, be real journalists.
From a comment today:
As Blaze asks — will there be a simple YES or NO answer from Canadian government representatives and leadership hopefuls: http://themoneyguide.ca/open-letter-finance-minister-jim-flaherty-fatca/
My US tax lawyer gives an opinion: “Unfortunately, probably not. Unless the answer goes something like this (which is unlikely):
Does any Canadian want their financial information turned over to the IRS by their bank or the CRA because they are a US person, a Chinese person, a German person, a Israeli person or any other type of Canadian? How would the IRS handle getting FBAR’s / 8938 information on EVERYONE? Should all financial information for everyone on the face of this planet go to the UN, for instance (as someone else commented today)? Leaving aside just the “security” for that information, it is bizarre. (Of course, the US should start in their own backyard – real (not perceived) tax evasion in Delaware and Nevada, but that is a side issue.)
Thanks to SwissPinoy for making the banking fee point. As he notes in his FP comment, a big bank in Zurich has doubled its banking fees since Switzerland signed FATCA, in order to pay for the bank’s compliance costs.
The banking-fee-increase issue isn’t a joke or a dream, folks — it’s happening already elsewhere. And it will affect ALL Canadians, who need to hear about this.
Calgary 411, thanks for that post. It’s the first I have actually read where a someone admits that Canada is key but that Canada is not bending over without a fight – although the Canadian govt is missing a golden opportunity to shake off FATCA by excluding Canadians from what is going on.
Yesterday I was advised that my European bank in Singapore cannot take orders for trades or do wire transfers for me now if I am on US soil! Note this is a fully disclosed and compliant account and has been forever. They cannot call me on a US number either. When I am not in the US physically there is no issue. They are not taking any US citizen clients but did not close my account but I had to sign an indemnification to the bank if there was a US tax claim or fine asserted against the bank by the US. I also had to agree that my US tax returns will always be done by a Big 5 accounting firm like Price Waterhouse or Ernst & Young. It gets more bizarre all the time.
Here’s a comment I just submitted:
“More damagingly, spooked foreign financial institutions are refusing to accept Americans living abroad as customers. Many also plan to pull back on their investments in the U.S. — which of course has serious implications for the country’s still-faltering economy.”
Indeed. Even the FATCA compliance industry, which stands to reap hundreds of millions of dollars in software design and consulting fees, warns of the inevitable blowback for the United States:
“FFIs will need to make a strategic call on remaining invested in the US market or exiting it, for the sake of its customers or itself.” [quote from the Newgensoft.com website regarding their FATCA Compliance Solution software suite]
The U.S. is shooting itself in both feet with its own FATCA weapon. It is blinded by its paternalistic and repugnant notion of “exceptionalism”, coupled with a crudely vindictive, ideology-driven assumption that all American expats are duly suspect for ever wanting to leave The Greatest Country On Earth™ and therefore deserving of whatever financial armageddon the American government chooses to inflict upon them, their “foreign-born” spouses, their “foreign-born” children and the treasuries of the “foreign” countries in which they live.
It is breathtaking imperialism, on a scale not even the Romans could have imagined, for it literally encompasses the globe and the universe beyond. It is called citizenship-based taxation, and is absolutely immoral, and has been roundly condemned by the United Nations. Only the failed state of Eritrea practices CBT, outside of one other country on earth – one which hypocritically supported the UN resolution against it – the United States of America.
Fortunately, the world CAN say no to FATCA, and will do so emphatically, by pulling-out as much as 16 TRILLION dollars worth of direct foreign investment in the U.S. economy. Just wait for 2017, when the punitive 30% FATCA withholding begins, and the world flees America’s hubris and insanity once and for all.
Hello Calgary,Not that Lisa,Mark Twain,Edelweiss ,SwissPinoy and others :in relation to:
•In one sense, it is good that the bank will not let US persons have PFICs. Taxes on PFICs can more often than not be higher than any gain in the fund, due to exchange rates and the way PFICs are taxed. One can be hurt very badly if one owns a PFIC. (See the case of JN above.)
•For anyone who wants to renounce, they should renounce before their fund account is converted to cash. They may suddenly find themselves paying huge US PFIC taxes on funds that were sold. If that had thought they could keep this account after they renounced, the timing is critical to renounce now.
(see my comment and others on”Why are Americans giving up their Citizenship”)
1)The PFIC fund was recommended to me by my bank as a solid investment .They should have known better even many years ago what they may offer me.I think the BANK SHOULD PAY THAT TAX,NOT I. 2)I’m very confused by all this.Can I renounce before /instead of dealing with IRS taxes?All this is the worst life scenario I’ve ever experienced.
3)Why are almost only Canadians commenting here?This great site must reach out to all US persons worldwide.
And speaking of strange bedfellows, Conrad Black has just offered-up a timely National Post essay on a timely topic entitled Toward a theory of Canadian exceptionalism. I have already commented there and would encourage others to reach out to Mr. Black. Despite his colourful and controversial past, the man is a good writer and a quick student of realpolitik. I look forward to his views about FATCA. Meanwhile, here was my comment:
“Mr. Black, I am assuaged by your dismantling of the myth of American exceptionalism, and by your encouragement of Canadians to formulate a more enlightened and progressive brand of their own. Nevertheless, I fear that you may be overlooking a vital example of the destructive consequences of American exceptionalism which is gathering steam just ever so slightly out of mainstream view but which threatens to shake the very foundations of what it means to be a Canadian. I am speaking of FATCA – the Foreign Account Tax Compliance Act – which represents perhaps the most pernicious imperialistic overreach by an American government since America’s founding fathers rebelled against the pernicious imperialistic overreach of their British masters.
Drenched in irony, FATCA turns the American Boston Tea Party creation myth of “no taxation without representation” on its head, as it seeks punishing tribute from ordinary American expats, so-called “U.S. Persons” in IRS-speak, whose only crime was to have suffered the misfortune of being born in the United States but through choice or circumstance happen to be living in a “foreign” country – like Canada, where we already pay some of the highest taxes in the world. As Finance Minister Flaherty himself has said, “Canada is not a tax haven.”
Now, as FATCA begins to fully reveal itself, Canada is faced with a grave choice: either throw a million Canadian citizens of US descent under the proverbial bus, along with their Canadian-born spouses and children, or do the hardest thing which any government must do – the right thing – and refuse to capitulate to the outrageous demands of the US government.
I can’t begin to explain here all the details of this impending train-wreck, but I would simply implore you, Mr. Black, to read and learn more about this issue and to then share your point of view on the topic. There is a groundswell of fear, anger and desperation amongst America’s worldwide diaspora of 6-7 million people, and we need as many voices and perspectives as we can muster to encourage our government leaders to do right by Canada, and to uphold our Charter of Rights and Freedoms. Our country, with the world’s largest concentration of U.S. Persons, is being counted-on to lead the way in this fight. We must not fail. We must, indeed, be exceptional.
If you would be so kind, sir, please drop by isaacbrocksociety.ca to learn more, and perhaps to dialogue. Meanwhile, you may find some current discussion about these matters elsewhere in the National Post in this article by Araminta Wordsworth: “American expats feeling less free as draconian tax law kicks in.” Even there, the comments offer a valuable primer on the threat FATCA poses to all Canadians, and to sovereign nations around the world.”
And, finally, I also contributed a comment to yet another National Post article, this one by Andrew Coyne:
Andrew Coyne on Canada’s new fiscal reality: Ottawa has the money and the provinces need it — desperately
“Let’s see how the math adds-up when FATCA kicks-in next year and the Canadian government allows the Americans to begin “transfer payments” of hundreds of millions of dollars in tribute to the bankrupt regime to the south from 1 million Canadians who just happen to have been born in the US.
It will also result in massive increases in banking fees of all kinds to pay for the unbelievably complex and expensive compliance systems that are already beginning their sea trials at a Canadian bank near you. I haven’t even mentioned the PIPEDA conflicts and forthcoming Charter challenges either.
Don’t know what I’m talking about? You will, very soon. And this is a topic that you, Mr. Coyne, and your MSM brethren had better start paying serious attention to. The damage inflicted by FATCA on Canada’s economy will start being reflected by the PBO itself in the not-too-distant future and is thus completely relevant to this discussion. ALL Canadians will pay dearly for the FATCA Follies if our government capitulates to the Americans, as will sovereign nations throughout the world. This is a topic the Canadian people need to hear more about – desperately, to quote your headline.”
So, I’m done with the National Post for a little while. Good night all.
FATCA’s infamous stalker has invaded Canada again, hoping again that ad hominems against Canadians will save FATCA. Don’t bother with the “down marking”. Instead, flag FATCA for being the violation that it is.
@All
Excellent articles and comments here and on the articles by you all. I sent the article to my mp, Flaherty, Schoom, Trudeau, and May and my friends. You all are amazing.
I second northernstar’s comment! What a nice surprise to wake up to this morning after taking a night off from the internet and thinking about FATCA. Way to go everyone!
Thanks, J.N., for highlighting the fact that some of our banks and investment advisors have let us down in recommending PFICs as “solid investments.”
As well, many Canadian accountants who did our Canadian taxes advised us over the past decades that we did not in fact have to file US tax returns as we would not owe the US anything.
As well, as well, the Canadian government and the financial institutions who offer Canadian Registered products like the Registered Education Savings Plan (RESP), the Tax Free Savings Account (TFSA) and the Registered Disability Savings Plan (RDSP) need to have a warning on their sales pitches which says that these products are in the eyes of the US IRS “foreign trusts” and as such toxic investments for anyone who may be a ‘US person.’ They know this is the case; they know some Canadians have been blindsided (and penalized by the US), thinking they were good investments for their portfolios (most often small investors attempting to have the best choices in savings for their children’s educations, as part of their retirement investments, and for needs of their disabled family members. These are only good products for SOME Canadians; 3% of the population is discriminated against in holding these investments that benefit all other Canadians. At the very least there needs to be full disclosure on just that.
@Calgary411 I am not sure I understand why it is the responsibility of banks or the Canadian government to advise persons not to have funds that might be considered PFIC. Many of us here argue that banks do not have any right to know whether or not we might be contaminated by the US Person plague so how now can we expect them to look out for that on our behalf? Should Canadian banks and our govt have to advise persons of the permutations of banking and taxation for every country around the world?
I have all of these things – TFSA, RESPs, mutual funds (PFIC for the US) – because I am a Canadian who has earned all of my income in Canada and has no connection to the US. I have done what “normal” Canadians do. The issue is not with Canadian banks or the govt advising us correctly on the risks of the US IRS – the problem is that the US govt thinks they are sovereign over other nations.
Thank you Deckard1138 for your letters to Conrad Black and Andrew Coyne and everyone who left comments on the NP article.
I’m awake now – here’s another comment I left on Araminta’s NP article:
“While Araminta has touched on a few of the more salient consequences of FATCA, there is another extremely important related issue which must be addressed – how FATCA will bolster America’s growing surveillance state, providing data-mining opportunities which have nothing to do with its purported purpose of catching “tax cheats”. Rather, FATCA’s unprecedented bounty of personal information and metadata will be shared widely amongst America’s entire intelligence, military, homeland security and law-enforcement communities. As one FATCA compliance industry article put it, “The word ‘tax’ in FATCA is misleading. Substitute the word ‘tax’ with ‘data’ and you’ll have a better understanding of the regulation.”
Some of the best current commentary on this dangerous and truly Orwellian aspect of FATCA comes from James Jatras, on his web site repealfatca.com. In an article entitled “FATCA: A Tool Of The Electronic Surveillance State”, James lays-out exactly how foreign financial institutions and governments will be co-opted to provide reams of personal financial information to the U.S. government with no due process or expectation of privacy from U.S. security agencies.
Mr. Jatras writes:
“…the sheer scope of the data haul that can be accessed if foreign financial firms’ data – potentially, all of it – is compromised through FATCA compliance could make the revelations to date about NSA’s snooping pale to insignificance. Already, we’ve seen the willingness of the NSA to require American domestic firms to hand over what their customers thought were private communications, to insert vulnerabilities into commercial encryption systems, and otherwise to flout the rule of law. Such lawlessness achieves a whole new dimension of menace when firms, literally, anywhere on the planet can be forced by the one-and-only global sovereign to submit to the same treatment – with their own governments meekly cooperating even as they denounce the latest reports about the NSA.
Will the watchdogs of electronic privacy finally figure out that FATCA is not really about taxes? It’s time to find out.”
This aspect of FATCA must remain front and centre in any meaningful discussion about its true impact on the world community. It is far from being about a handful of U.S. Persons being offered-up as human sacrifices to FATCA’s demands – it is about the entire world willingly placing itself under the heel of the American jackboot. We must stand as one against this unilateral threat to the sovereignty of all nations. FATCA has virtually nothing to do with taxes, but it does have everything to do with power and control.”
DM56,
Banks can advise; i.e. put a warning sticker on these investments, that they are not a good idea for ‘US Persons’. They know it and it should be part of their information / their job to warn. There is no need that they know your ‘US personage’ to do this. It should be part of any prospectus type information (although these don’t have prospectuses). Sure, the problem is with the US IRS intruding into our country. But, it could easily be advised that these what the US considers “foreign trusts” are therefore toxic to any US Person. Doing what normal Canadians do in regard to these investments is how it should be, but it is not until we know what our Canadian government negotiates with the US in the form of a FATCA IGA.
The answer is NO, just for the US (and perhaps Eritrea?) as the USA practices Citizenship-Based Taxation instead of Resident-Based Taxation that the rest of the whole world practices. That makes these consumer products toxic for some — warning stickers are on all kinds of consumer products.
@Calgary411
I agree, it smells of entrapment otherwise.
@Deckard1138:
Loved the trademark sign!
Oops – sorry about that! – I don’t have the blockquotes mastered yet. Here it is again in plain text:
@Deckard1138:
Loved the trademark sign!
“The Greatest Country On Earth™”
More seriously, though, thank you very much for your historical perspective.
@Sad-in-the-UK
Thanks – I’m glad you liked the comment.
@ Deckard1138
Excellent comments at the National Post. You are on a roll.
Everyone get out your up arrows. Here’s the three all together …
http://fullcomment.nationalpost.com/2013/09/27/american-expats-feeling-less-free-as-draconian-tax-law-kicks-in/
http://fullcomment.nationalpost.com/2013/09/28/conrad-black-toward-a-theory-of-canadian-exceptionalism/?utm_source=dlvr.it&utm_medium=twitter
http://fullcomment.nationalpost.com/2013/09/27/andrew-coyne-on-canadas-new-fiscal-reality-ottawa-has-the-money-and-the-provinces-need-it-desperately/
I see our friend SR has showed up at the National Post article.