http://www.knax.co/2013/11/fatca.html?spref=tw
Taxation Bill introduced today includes rules allowing people to comply with foreign account information-sharing agreements.
The United States Foreign Account Tax Compliance Act (FATCA) legislation is due to take effect on 1 July 2014. Under FATCA, financial institutions, regardless of their location, will be required to report on certain United States account holders directly to the United States’ Internal Revenue Service, or face a withholding tax on United States sourced income of 30%.
It is proposed that New Zealand enter into an “intergovernmental agreement” (IGA) with the United States, to significantly reduce the compliance costs of FATCA for New Zealand financial institutions. Negotiations for such an agreement are currently underway.
The provisions in the Bill will enable financial institutions to comply with the IGA, and any future similar agreements.
Wow – they are going to introduce legislation in parliament and override the Privacy Act before they’ve even signed the IGA. Shocking.
There is a lot of information to digest here. In particular the Regulatory Impact Statement: http://taxpolicy.ird.govt.nz/sites/default/files/2013-ris-arearm-bill-04.pdf
On Page 6 I see the following is listed as a “cost” to US persons:
“US persons: Any avenues they may have to take action against financial institutions for breaches of the Privacy Act or Bill of Rights Act may be extinguished. For those reported on, there may be the imposition of tax and penalties from the IRS. While the IGA does not alter any substantive taxing rights, it may have the effect of making the IRS aware of existing non-compliance. However, this is consistent with the aims of FATCA”
So, basically they are saying they support CBT and the effects it will have on their own citizens.
Need to have a good read of this and it’s implications.
Just came from an evening with a member of the compliance complex in NZ. A CPA whose livelihood depends on IRD regulations and compliance. No worries mate. Comply.
@Osgood
It is clear that the Government of New Zealand does not understand that to tax the U.S. person in New Zealand is to allow the U.S. to extract capital from New Zealand. In other words to facilitate the taxing of U.S. persons in New Zealand is to put new Zealand in a position where it agrees to “pay tribute to America”.
Stupid is as stupid does.
Remember John Key and his ACT and United Future partners only have a one seat majority in Parliament(more like a 60 60 split given the Speaker is from the Nats). This is a path to killing this bill. For the Kiwis here I would start to ramp up your media and MP outreach going into Christmas.
Additionally the next NZ election is scheduled for no latter than December 2014 and will probably be held sooner than that.
“Wow – they are going to introduce legislation in parliament and override the Privacy Act before they’ve even signed the IGA. Shocking.”
Actually, this is the right order to do things and what the US should have done as well. Vote on allowing reciprocity instead of promising something that is currently not law and that you can only “promise” to other countries.
What’s the point of signing something that you don’t have the right to implement in your own country anyway?
Signing an IGA, then taking the risk that your laws won’t be modified to allow what you signed is putting the cart before the horse.
@osgood, thank you for flagging those points, re; “..they are going to introduce legislation in parliament and override the Privacy Act before they’ve even signed the IGA. Shocking”, and the others. This gives us in Canada and other countries further notice as to what our governments might be up to in secret – deliberately hiding it from their citizens, residents, voters and taxpayers in order to stifle opposition and push FATCA through in a subversion of our Constitution and Charter rights.
I note all that though ‘privacy’ rights continue to be cited as obstacles to implementing FATCA – even by the Compliance Industrial Complex and the banks, the issue of discrimination based on birthplace, parentage and national origin are never referred to. In NZ, is there an equivalent to the Canadian Charter of Rights that might block FATCA even if challenges based on privacy are neutered by changing the privacy laws?
“It is proposed that New Zealand enter into an “intergovernmental agreement” (IGA) with the United States, to significantly reduce the compliance costs of FATCA for New Zealand financial institutions.”
I assume this means that the banks want to stick it to the taxpayer.
Even the US says:
“Federal Protections Against National Origin Discrimination
Issued October 2000
INTRODUCTION
Federal laws prohibit discrimination based on a person’s national origin, race, color, religion, disability, sex, and familial status. Laws prohibiting national origin discrimination make it illegal to discriminate because of a person’s birthplace, ancestry, culture or language. This means people cannot be denied equal opportunity because they or their family are from another country, because they have a name or accent associated with a national origin group, because they participate in certain customs associated with a national origin group, or because they are married to or associate with people of a certain national origin. “……
http://www.justice.gov/crt/legalinfo/natorigin.php
Doesn’t New Zealand have anti-discrimination laws? If the government proposed legislation saying “New Zealand residents of Chinese origin will not have banking privacy” for example, what civil rights groups would protest? Can they be alerted to this?
@badger @vin-de-table
Yes, there are anti-discrimination laws. The Human Rights Act 1993 specifically prohibits discrimination based on Nationality (including citizenship). They know this, I personally have written them on numerous occasions about it. They obviously believe that their legislation will overcome it. Or, more likely, they will craft the legislation for the FFIs in such a way that it does not appear to discriminate, somehow.
Switzerland also has a law that prohibits discrimination based on nationality or ethnicity. When the compliance officer at the retail bank where I had banked for years suggested that I go elsewhere in the summer of 2012, I said that this was a form of illegal discrimination against US citizens. He initially responded that purging of US citizens was recommended by the Swiss Bankers Association. He then called several days later to advise that the purging was not contrary to the anti-discrimination law because it was directed at anyone who was subject to US taxes (“US steuerpflichtig”) and so it was not discriminatory against a particular nationality or ethnicity.
Good luck to you in NZ!
There is now a letter format full of questions that Kiwis can use, if any of them are awake taxation slumber to take action before their laws are changed. It was just posted here…
123 Questions to Ask Your Government About FATCA
Hmmm, this would likely be how the Canadian government would attempt to sidestep the Constitutional issue of discrimination when/if an IGA is signed.
Is there a solid legal argument against this?
I suppose that if we proved to enough of an obstruction to an IGA, that banks might just try this.
How do you prove that you are/are not someone subject to US tax without bringing their ethnic origin into the conversation?
Leaving this from Lea Turkington on a couple threads
@Kyla4u
Anyone feel like participating in Project Xpat? I’ve just given them a piece of my mind. It would be good for them to hear from as many people as possible.
http://www.npr.org/blogs/theprotojournalist/2013/11/22/246639969/project-xpat-exploring-the-expatriate-life?utm_content=socialflow&utm_campaign=nprfacebook&utm_source=npr&utm_medium=facebook
My answers were:
My name, email address, etc.
Where I live now – United Kingdom
What place do I consider home in America – I don’t.
Why did you move abroad – I married my British husband 18 years ago. We have lived in both the UK and the US since them.
What does it mean to be an expat (10 words or less): US homelanders hate expats – FATCA and citizenship-based taxation prove it.
So, please, everyone feel free to join in!
Thank you @osgood re; “..They obviously believe that their legislation will overcome it. Or, more likely, they will craft the legislation for the FFIs in such a way that it does not appear to discriminate, somehow.”..
That too is probably what Canada will try to do. The US FATCnatics at Treasury no doubt have been very helpful with sharing how countries might get around their privacy (and human rights) laws in order to shepherd those IGAs along.
@Innocente, re; …”the purging was not contrary to the anti-discrimination law because it was directed at anyone who was subject to US taxes (“US steuerpflichtig”) and so it was not discriminatory against a particular nationality or ethnicity. ”
How does “US steuerpflichtig” translate? Does it mean that this very specific US tax concept is now enshrined in Swiss law?
Some IBS participants have said that ‘US taxable person’ is not a concept that has standing in Canadian law – otherwise that would segregate Canadian dual citizens, permanent residents in Canada, and greencard holders into a discriminatory subcategory based on a foreign (made-in-the-US domestic ) legal definition – which would stink of enforcing US tax laws in Canada. Still seems to me that making distinctions between different classes of Canadian citizens based merely on birthplace and parentage/ancestry is discrimination.
This story is out in the New Zealand publication called…
Interest.co.nz
Headline…
Govt unveils enabling legislation to deal with inter-governmental agreement with US over controversial FATCA tax law
So far, this has generated 2 tweets and no comments. Last time there was an FATCA story back last year, it generated a fair amount of discussion.
NZ to seek US ‘FATCA’ deal
Gareth Vaughan – 25 Oct 12, 7:38pm – 65 comments
Maybe because this came out on Friday night, and it is a beautiful weekend here, no one has noticed…
I will check in a few hours to see if anyone is suggesting any questions that ministers should ask. The provisions are in an omnibus bill, so like all things FATCA, keep them below the radar…
In a pre-emptive move, the Government has introduced enabling legislation for an anticipated inter-governmental agreement with the United States on its controversial Foreign Account Tax Compliance Act, known as FATCA.
Enabling is what it appears: http://isaacbrocksociety.ca/2013/11/22/government-of-canada-ratification-of-the-convention-on-mutual-administrative-assistance-in-tax-matters/comment-page-1/#comment-696857; getting rid of the potential to breach the New Zealand Privacy Act if they were forced to report details of their customers to IRS.
@PwC_NZ welcomes IR’s proposals to help comply with US reporting. But of course they wud! Consulting $$$ http://bit.ly/18XTD2g via @scoopnz
@marie: prior to the bank’s compliance officer calling, someone had called from local branch to inquire whether I was a (still) US citizen, which I confirmed. When I opened the account many years ago the bank made a photocopy of my US passport, which was apparently still in my file although it would have expired. So the bank first confirmed my USC status and then used the “US taxable” status when I pushed back with discrimination.
BTW: I was prepared for the compliance officer’s first call and had noted the Swiss criminal code article number to quote. Since discrimination is a criminal offense in Switzerland, I told him I was considering going to the police to charge the bank and him personally with a criminal offense. He looked up the criminal code while we were talking. This is a relatively small bank and I expect that he was in contact with the bankers association or a law firm for additional support after the call before re-contacting me.
@badger: “US steuerpflichtig” translates as US taxable. A US-taxable person does not necessarily have to be a USC so this is the way that the Swiss anti-discrimination law was skirted. I now deal with one of the (apparently) three banks here that set up a USP-compliance group.
Several months ago I received a letter from the new bank which also used the term “USA steuerpflichtigen Kunden und Kundinnen” (USA taxable customers). However, it later states that is it requiring W-9s “von Kundinnen und Kunden mit Nationalität USA oder Domizil in den USA” (from customers with USA nationality or resident in the USA). This bank may have violated the Swiss anti-discrimination law by using the term USA nationality.
Another comment: I know a family who used to have an obviously Jewish surname until the patriarch changed it after WWII to make it non-descriptive. I asked an elderly relative about this several years ago. Her response was he did it “to fit in better”, which I interpreted as why advertise that you are Jewish given what had just happened in Europe? I think there is a lesson to us in that. When asked to fill out a form indicating nationality or birth location, leave it blank and see what happens. Do it by mail and not in person or by phone. Don’t make it easy for them to follow up and cooperate in this area only when there is no other choice.
@Innocente
It’s not really clear to me how it’s not discrimination because the bank was only able to determine you were a US taxpayer because of your national origin. Just because someone can be a US taxpayer without being a citizen of the US does’t mean you weren’t discriminated against. There’s got to be a good analogy for this but I can’t think of one right now. What a bunch of BS.
Any supreme court challenge should be based on Canadian resident keeping C$ account without relaying info to USA.
In addition this website should be spending a lot more time discussing ways to beat FACTA rules.
George III,
Define ‘discussing ways to beat FATCA (not FACTA) rules. I don’t think most here are into anything that can be described ‘tax evasion.’ We want to defeat FATCA, not beat the FATCA rules. You (or Harry) have previously given me suggestions to get around my son’s situation. Speaking for myself only, I am not looking for a ‘work-around’. I want my financial matters to be treated the same as any other Canadian, no matter where that Canadian may be from or where his/her parents may be from.