Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 10 Comments

From the Finance Canada website:

“The Government of Canada today ratified the Convention on Mutual Administrative Assistance in Tax Matters, done at Strasbourg on 25 January 1988, as amended by the Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters,done at Paris on 27 May 2010 (collectively, the “Convention”). Canada signed the original convention on April 28, 2004 and the Protocol thereto on November 3, 2011. The Convention will enter into force, in respect of Canada, on March 1, 2014, and will have effect in accordance with Article 28 of the Convention.

“The Convention, developed jointly by the Organisation for Economic Co-operation and Development and the Council of Europe, is a multilateral instrument, open to all countries, whose purpose is to improve international tax co-operation between the taxation authorities of countries that are a Party to the Convention, with a view to combating international tax avoidance and evasion. In Canada, the Convention will apply to Canadian taxes that fall under the Income Tax Act, Excise Tax Act, and the Excise Act, 2001.

“Under the Convention, Canada will exchange tax information pursuant to the OECD standard with other Parties to the Convention. Pursuant to reservations, Canada will not under the Convention be obligated to collect taxes on behalf of another country, or provide assistance in the service of related documents. Canada will instead continue to negotiate a provision on assistance in the collection of taxes on a bilateral basis, and has agreed to include such a provision in certain of its bilateral tax treaties.”

See: http://www.fin.gc.ca/treaties-conventions/notices/maatm-aammf-eng.asp

Is there anyone out there with the expertise to determine the relevance of this to FATCA implementation in Canada?

10 thoughts on “Government of Canada: Ratification of the Convention on Mutual Administrative Assistance in Tax Matters”

  1. This looks like bureaucratese … a language used when politicians and bureaucrats do NOT want the people of a country to understand what they are doing yet want later to point to the statement and say … see, we made full disclosure.

  2. This agreement has been kicking around for a long time(Canada first signed in 2004 and the treaty itself goes back to the 1980s). It is not that significant as Canada has consistently(including through direct communication by Flaherty to several Brockers) that it intends to take a full reservation on any assistance in collection requests. The information sharing provisions are for upon request only and subject to discretion of the CRA as to cooperate. I am not a huge fan of this treaty but it is not that relevant to our issues.

  3. Do we really need multi-layers of treaties going off in all directions to make a concerted effort to fight offshore tax evasion?

  4. New Zealand just ratified it as well ….. without the reservation against assistance in collection. So it may well have ramifications in this country as when the US comes knocking for their money after the FATCA roundup, the NZ government will be forced to collect under this agreement. That’s my interpretation of it anyway.

  5. From JustMe: http://isaacbrocksociety.ca/2013/11/22/123-questions-to-ask-your-government-about-fatca/comment-page-1/#comment-695680

    One further question that is probably all inclusive in the list above, (and as I write this, I have not read the post in detail yet) is this recent question that Andrew Quinlan, Center for Freedom and Prosperty just posted this morning under the heading…

    OECD and G20 Won’t Save Us From FATCA

    Why has neither the OECD nor the G20 taken a stand on FATCA, whose existence constitutes a clear violation of international law and which will cause worldwide increase in the cost of banking services?

    Both the OECD and the G20 require that member countries comply with international standards, one of which is the factor of residency for the collection of taxes, including universal income. This means that under the universal tax system, a citizen of Europe, Mexico, China, India, Japan, etc., pays taxes to their country of residence. … In contrast, the U.S. violates this international standard and taxes its citizens wherever they reside, and implementation of FATCA will require that the rest of the world become tax collectors for the U.S.

    on an amusing aside, they noted this from Dr. Eduardo Morgan Jr

    As an interesting parallel, the Spanish name for the parasitic vine that imprisons and sucks the sap and life from the host tree, is spelled “Higa”, pronounced IGA.

  6. The ratification in Canada and NZ is an intentional and planned pre step to clear the way for an IGA. There should be no confusion about this – Canada is clearing the way for an IGA and FATCA. NZ as we have seen cares not about the rights of it own affected citizens and has casually now announced legislation to amend its privacy laws to clear the way for an IGA.

  8. No other description but “Sleazy”: http://www.scoop.co.nz/stories/BU1311/S00793/pwc-welcomes-irs-proposals-to-help-comply-with-us-reporting.htm

    One of the main concerns of New Zealand financial institutions has been the potential to breach the New Zealand Privacy Act if they were forced to report details of their customers to IRS. The enabling legislation places obligations on New Zealand financial institutions to report that information under New Zealand tax law, which is permitted under the Privacy Act.

    The draft legislation enables obligations included in information sharing agreements, such as the proposed IGA, to be enforced under local New Zealand laws. These obligations include obligations to register, perform due diligence procedures and provide information to IR or directly to a foreign tax authority where this is required under an information sharing agreement.

    One option being considered by financial institutions that deal with few US customers is to close all accounts provided to US residents. The legislation specifically authorises the financial institution to choose this option.

    Mr Risk notes, “This appears to be an attempt to address a concern that such a course of action could be discriminatory against US customers and amount to a breach of human rights.”

    The enabling legislation has been drafted in general terms to apply to both the proposed IGA with the US Government and any future agreements the New Zealand Government may enter into.

    This is in line with the current trend toward increasing exchange of taxpayer information between governments, which is being led by the OECD.

  9. Calgary – I wish my view was different but Thailand went through a similar process regarding AML and OECD compliance to clear the way for FATCA IGA negotiations per KPMG inn Bangkok. The secrecy of all of these discussions worldwide and the single mindedness of the compliance industry and the FFIs to get FATCA compliant regardless of the existing privacy rights and laws of a nation is unbelievable. I can only hope that the Canadian equivalent of the ACLU and similar groups waste no time in filing legal challenges once an IGA is announced. A lot is riding on Canada worldwide on this. I wish I was Canadian so I could be more directly involved.

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