From Maple Sandbox: Finally a response, but few answers to Ted Hsu questions.
Let’s start reading and helping Ted Hsu in quest to get answers for us from the Canadian Parliament!
As bubblebustin points out:
Virginia La Torre Jeker believes that the US-Swiss Programme will serve as a template for banks in other countries:
http://taxconnections.com/taxblog/swiss-continue-to-cave-in/#.UufpvHmtuYU
Finally, the government “responds to Ted Hsu’s questions.
But, Dr. Hsu says:
You can see the response to my Order Paper Question on FATCA. It is a long response (226 pages in both official languages), but it’s surprising how few answers there are to a 55 part question! For instance, on page 75 I asked the Minister of Finance to provide a list of specific individuals and groups he had consulted with regarding FATCA and the response was simply that “The Government of Canada has consulted and has been contacted by individuals and groups to discuss the implications of FATCA and an IGA in Canada.” I also asked which studies and analyses the Department of Finance had undertaken with respect to FATCA, and was told that “The Department of Finance is reviewing the implications of FATCA on an ongoing basis. FATCA has raised a number of concerns in Canada- among both dual Canada-U.S. citizens and Canadian financial institutions.”
As Dr. Hsu also says:
We all deserve better answers from the government.
He’s asking for our help:
I know there is a lot of expertise out there to help analyse and pick through this response. So I invite you to do so on my facebook, and please let me know what you find.
Thank you!
Ted
I haven’t had time to review the “response” yet because I wanted to quickly get this posted. After we have had time to read this, I hope we will all pitch in and share a “lot of expertise ” to analsye this for Dr. Hsu.
Yikes! Lots to do. Help Dr. Hsu, do submission to help friends in New Zealand, write articles, organize information session. Have a life?
I understand from one of Dr. Hsu’s staff that “responses” to Scott Brison’s questions are expected later this week. I think we should be prepared for more weaseling.
Thanks Calgary411
At 1st “speed-reading”:
– Most of the substantive responses are from Ministry of Finance and mostly reiterate previous letters and communications. Much mention of existing Canada-US Tax Treaty. Much mention of “negotiations on-going”.
– Ministry of Justice evades commenting on most of the questions regarding Charter rights and implications by claiming “client-solicitor” privilege (they are the Government’s lawyer). NOtes that review of all legislation for Charter issues is an standard process once the legislation is prepared.
– Apparently no review of FATCA IGA by Canadian Human Rights Commission.
Like Wondering I did a quick scan of the document. The only substantive reply seems to be from Finance, in English on pages 73-78 of the pdf file. Basically the reply says that negotiations for an IGA with the US are still going on, that whatever agreement is reached will require approval by Parliament, and that it would be administered by the CRA under the existing tax treaty with the US.
That leaves the question, of course, of when we might expect the results of the IGA negotiations to be announced, considering the current deadline of July 1, 2014, for Canadian financial institutions to begin implementing FATCA. Perhaps the IGA will be included in the budget bill to be released on February 11.
I just saw this on Allison Christian’s blog:
http://taxpol.blogspot.ca/2014/01/canadian-government-responds-to-fatca.html
It appears to contain a PDF of ‘answers’ to MP Brison’s questions too.
Have only had time to skim the first ‘answers’ from the Harper government to MP HSU.
first fast reactions, apart from nausea at depth of Harper government bad faith and lack of concern for wellbeing of Canadian citizens and taxpayers:
– notable overall for lack of ‘answers’, demonstrates in my opinion deeply bad faith on the part of the Harper government, and lack of fiduciary duty of care towards Canadian taxpayers and citizens – whether duals or not.
– read and compare overall spirit of contents with Flaherty’s statements of 2011 against FATCA.
– mischaracterizes and conflates ‘public consultation’ with that obscure=paltry notice on the Finance Canada site – as previously suspected.
– the responses are deliberately conflating ‘reciprocity’ based on residency (Canadian RESIDENTS with accounts in the US) with the catch-all over broad category of US deemed ‘US Taxable Persons’ – based on US deemed statuses.
– watch out for the use of phrases like ‘DUAL-Canadian-American citizens’, but not mention of effects on those with ONLY Canadian citizenship – i.e. ex. and current greencard holders, non-US joint accountholders (ex. spouses, business partners, those for whose assets/estates/accounts USpersons hold POA etc but who have NO US tax or reporting obligations). No mention of effects on and costs to Canadian taxpayers and accountholders. Dodges with reference to whether US defined category of taxpayers exists in Canadian law – refers to US Canada treaty.
– dodges question of effect on registered accounts like TFSA and our ability to hold them, by pretending that FATCA is only a ‘reporting’ mechanism and not a ‘tax’ measure per se, disingenuously omitting integral role in extraterritorial taxation of Canadian taxpayers.
– refers to current ‘protections’ of US Canada tax treaty – which we know has serious existing flaws even without FATCA.
– no cost or benefit analysis alluded to anywhere.
– privacy considerations mentioned in context of banks only – re PIPEDA – (which may not be strong enough or specific enough to prove an obstacle as currently configured. When was PIPEDA last revised?).
– pretends that information exchange protected by current terms of joint tax treaty – use of information for tax purposes only – but we know that the Homeland Security, Patriot Act, etc. allows for dissemination of any information sent over the border becomes subject to those other US laws without transparency, accountability or recourse. We know that FATCA is designed to collect, use and disseminate our financial information without the limits on US tax returns or FBARs. We know it has been designed to be used far more widely than in TAX matters – re for use distribution by other federal agencies and department, and in matters pertaining to crimes such as money laundering, terror funding, the drug trade, etc.
My Canadian friends, Petros has been on to something concerning the Master Nationality Rule and even dominant nationality.
I think looking in, you need to educate your politicians that you are CANADIAN not some hybrid genetic modified crop!
All you want is to be treated as Canadian. The US has no claim to you in Canada and you have no right to ask the US for help whilst in Canada.
Dual nationality is a cute phrase that has morphed into something that is causing us all trouble.
Further the US State Department agrees with that in their publication 7 Fam 080.
Really, the solution for Flaherty is rather simple. Canadian Citizens that lost life’s lottery by being born in the USA are well they are Canadian, nothing more and nothing less. There should be no further questioning, this idea of indica is so degrading.
Yes, I do see US Citizens in Canada getting tossed under the bus but not sure how to prevent that other than encouraging them to become Canadian.
Lastly, please bring up the issue of precedent on this issue.
If your government throws Canadians under the bus and their sole misfortune was being born in the USA then your government needs to treat other Canadians the same regardless of any misfortune they may have by birth.
What will your government say when China comes calling and asks about Canadians born in Beijng?
@Calgary411
Firstly, thank you for putting a submission to New Zealand on your list. That is much appreciated.
I do not have time to review this response in detail at this time. However, it looks to me that the approach that Canada is taking is quite similar to that in New Zealand. The parliamentary systems are almost identical. New Zealand is trying to force the “enabling legislation” through prior to the announcement of the signing of the Model 1 IGA. This allows them to make the legislation generic and claim that the IGA is still “under negotiation”, even though they have previously admitted it is on a “take it or leave it basis”.
NZ DoJ also has to review any legislation for consistency with our bill of rights. They did this for the bill in question and found no inconsistencies. http://bit.ly/1dLHKgZ I don’t know how they get away with that.
The actions and attitudes of both governments are a disgrace.
Interesting. Page 2/6 states that “The Government of Canada is close to a proposed agreement with the U.S. and is hopeful that it will be able to announce further details in the future. If an agreement is reached, it would be made public and require Parliamentary approval for implementation.”
“If” an agreement is reached…
Why hasn’t anyone questioned the legality of the 30% withdrawing in international law?
We’ve never seen any article about that. Say that the Canadian government doesn’t reach an agreement and therefore forbids its banks to adhere to FATCA. Can the 30% withdrawing be challenged on at an international law level?
I can only see that whole mess leading to a switch to RBT. That’s what Canada needs to aim for.
@noone
Another question is whether 30% withholding in the absence of an IGA would represent a violation of NAFTA.
some of the problem may be Ted Hsu question only talked about dual
“Watch out for the use of phrases like ‘DUAL-Canadian-American citizens’, but not mention of effects on those with ONLY Canadian citizenship – i.e. ex. and current greencard holders, non-US joint accountholders”
(v) what studies and analyses have been undertaken to determine whether Canadian citizens and residentsare or will be denied financial services in Canada owing toUS tax law in general and FATCA in particular; (w)’ what are the conclusions or recommendations of the studies in (v); (x) what mechanisms are in place to ·ensure that Canadian citizens and residents are not and will not be denied financial services in Canada owing
toUS tax law in general and FATCA in particular; (y) what measures will be taken to remedy deniai of
services to Canadians as a result of FATCA;
The negotiations between Canada and the U.S. on an IGA are based on the Model 1 IGA released by the U.S.
Treasury. The terms of the Mode! 1 IGA would protect clients of financial institutions in Canada from the provisions of FATCA that would require Canadian financial institutions to deny access to financial services to certain clients in certain situations. This approach would ensure that there would be no conflict with the Access to Basic Banking Services Regulations under the Bank Act.
Important”
How about owning a Canadian only brokerage account for Canadian Stock and Bonds
“tdott says
January 28, 2014 at 5:35 pm
@noone
Another question is whether 30% withholding in the absence of an IGA would represent a violation of NAFTA.”
They already do a 30% withholding on US dividend. Maybe you can have a brokerage that does W8 but when I owned US stocks and mutual fund you got stuck with that witholding
Here is the wording that scares the shite out of me….
“As noted, FATCA has raised a number of concerns in Canada- among bath dual Canada-U.S. citizens and Canadian financial institutions. These concerns include the question of whether the FATCA reporting requirements, that would compel financial institutions to report information on account holders that are U.S. citizens directly to the IRS, would be inconsistent with Canadian privacy laws. Unless an agreement is in place, Canadian financial institutions and dual Canada-U.S. citizens holding financial accounts in Canada would be required to comply with FATCA starting July 1, 2014. To address these concerns, Canada has engaged in lengthy negotiations with the U.S.”
So what the Canadian government is saying is…unless they negotiate an IGA with the US, we “dual Canadian/US citizens” WILL be thrown under the bus by the banks and WILL have to comply with FATCA!
@GwEvil,
Yes, perhaps they mean how you took it; the wording is obtuse. Another possibility is that they are implying that an IGA saves us poor US persons from FATCA’s worst bite, so be happy that an IGA is forthcoming and that the government of Canada has done its job by making the pain a little easier to swallow. Or something like that.
Either way, its a weasel statement imho.
Yes WhiteKat, the conclusion s we came to are two sides of the same coin. No IGA and we are thrown under the bus…Yes IGA and we are protected under the patriarchal wing of the good ‘ol Canadian gummint from them US rascals! So BE HAPPY if there’s an IGA…woo hoo!
The problem is…. no IGA, Banks who throw anyone under the bus are responsible and liable. The banks know they cannot do this as at this point, we all are protected under the charter. This is why Marion Wrobel sits there and says an agreement will happen. I wish half of HIS family was a US person, but anyways, the main reason the CBA wants an agreement is to pass on the responsibility of passing the information to the US is for their own protection. Saves their asses…..
FIRST IMPRESSION:
After opening this pdf several times today (it opens very slowly) I finally realized I could download it in “preview” which is much faster. So that problem was solved but unfortunately it didn’t improve the content. Sorry Dr. Hsu. You did an excellent job of putting those questions together but the responses were not up to the high standard you demonstrated when you wrote Q-121. So far, I would only give the overall response to your questions a grade of D — D for Discouraging. Too often when something specific was asked the answer was anything but specific. This is my first peek inside the gears of government and it made me want to go back and just reread the Senate Finance submission by Richardson, Yates and Kish again to clear my head. Could not someone at least have done a summary of the department responses in one document? I’ve had to copy and paste these responses into a WP document to get rid of all the superfluous material. It all boils down to about a dozen pages.
SECOND IMPRESSION
It’s not surprising that there were department after department responding with “No studies, interpretations, analysis or comments have been made by [fill in the blank].” or the equivalent. I would not expect anything from Fisheries and Oceans Canada and who knew we had something called the Canadian Intergovernmental Conference Secretariat?
THIRD IMPRESSION
The departments asked to respond to the most questions were Canada Revenue Agency, Finance Canada, Industry Canada and Justice Canada. I’m still looking at those responses but what I have already found odd is that there appears to be nothing from the Office of the Privacy Commissioner. FATCA is all about privacy. I think we deserve some answers from the department which deals with privacy.
Finance Canada stated the following:
“The Department of Finance is not aware of any agencies, boards, tribunals, or commissions of the Government which have analyzed FATCA other than the CRA and the Office of the Privacy Commissioner.
Discussions between the Department of Finance and the Office of the Privacy Commissioner have been ongoing.”
If the OPC is one of the few departments which have “analyzed FATCA” then why wasn’t it asked to do a response to Q-121? Just wondering.
What I did find, to my dismay, was this:
Canadian Human Rights Commission
The Canadian Human Rights Commission has not studied, interpreted, analyzed, or commented upon the Foreign Account Tax Compliance Act.
The Ministry of Justice refuses to answer important questions regarding FATCA IGA and the rights of Canadians in Canada under the Charter. It cites client-solicitor privilege To me this says:
– In this matter, the Harper Government views its relationship with Canadian citizens as adversarial.
– Justice may well be concerned about legal impediments to the FATCA IGA. If it were clear sailing with no conflicts of law, why would they lawyer up and refuse to comment?
@Wondering: It is chilling that neither Finance nor Justice will make a simple statement that any agreement will conform to the Charter.
Instead, Finance bounces it to Justice. Justice in turn cites solicitor-client privilege. Of course, Finance could waive solictor-client privilege, but they won’t.
Em,
Yes, why, no input from OPC? (…and why have not any agencies, boards, tribunals, or commissions of the Government analyzed FATCA?
…and why has the Canadian Human Rights Commission not studied, interpreted, analyzed or commented on FATCA? It cannot be because so-called US Persons in Canada have not yet been affected — they certainly have been terribly affected, although the bigger effect to them and their families is yet to be seen.
@Em, calgary, all, re lack of any information/answers to MP Hsu’s questions from the Privacy Commissioner including any studies they may have done.
I had these questions/thoughts of my own (too in a hurry to formulate better/neater);
– what were the results of this study which the *the Privacy Commissioner commissioned; see http://www.priv.gc.ca/resource/cp/2013-2014/cp_bg_e.asp from Arthur Cockfield of Queens U plays:
Organization: Queen’s University, Faculty of Law
Location: Ontario
Funding Amount: $10,000
Project Title: The Privacy Implications of the Foreign Account Tax Compliance Act (FATCA)
Project Leader: Arthur Cockfield
Description: The project will review the privacy implications of the U.S. Foreign Account Tax Compliance Act (FATCA) in light of Canada’s Personal Information Protection and Electronic Documents Act. Specifically, the project will review implications on Canadian privacy rights and interests of any new agreement negotiated between Canada and the United States to implement FATCA. The project will also examine the interplay of FATCA with other Canadian laws that protect taxpayer privacy such as the Income Tax Act, the Canada-United States Tax Convention Act and the North American Free Trade Agreement (NAFTA). Finally, the project will review how Canadian banks are trying to comply with all relevant laws, and whether these banks are adopting new information technology systems to help them identify, sort, and transfer financial information to U.S. tax authorities.
– what deadline the OPC gave Cockfield for the study? Is it finished, and if so, can we get a copy?
Seems to me that MP Hsu, Brison, Rankin, and May should get a copy too.
– Why no other studies commissioned by other relevant federal departments and bodies (other than the Privacy Commissioner ) if TRADE and market issues re NAFTA, (WTO?), financial and non-financial sectors (insurance, pension plans, etc.) are present? NAFTA is part of Cockfield’s examinations re conflict/interplay with FATCA (see description of the study) but from a privacy only perspective? FATCA is very broad, and has complex trade, financial/banking, foreign relations, social policy, human rights, civil rights, constitutional, citizenship and other implications for Canadians. Have any other studies been commissioned by the federal government, or any other federal agency, department, entity, etc. ? The only one we know of (OPC and Prof. Cockfield) states that it is primarily focused on privacy. If no other studies were commissioned, then why not?
– the answers from the federal government were no answers at all in several instances. If other studies or opinions were commissioned, but the results were not in their hands at the exact time that the answers were issued, then technically, perhaps they could say they don’t have the information, but know that more is forthcoming?
– Did the government decide to focus on privacy issues only because they know/suspect/have an informed opinion that says that as currently enacted, or with tweaking, PIPEDA is weak enough or vulnerable enough, or has enough loopholes in its current form, that would allow for a FATCA IGA to be put in place in Canada? When was PIPEDA last reviewed? What are its weaknesses and vulnerabilities re FATCA? There are other privacy laws – in the provinces, that also come into play – does PIPEDA and federal law supercede those? (related aside – credit unions are provincially regulated?).
(As other relevant aside, re credit unions of smaller size and only ‘local’ members being possibly treated somewhat differently than banks under FATCA (local exception?), Flaherty and the Min. of Finance have just announced this: http://www.fin.gc.ca/n14/14-010-eng.asp which might change how they are regulated – moving from “provincial regulations to federal standards”. Would that make them MORE vulnerable to FATCA? And make it simpler for the federal government to force them into the FATCA IGA 1 mold? Thus removing any alternatives vis a vis the CBA members? CBA and IIAC have most certainly considered that it is better for them if we have NO alternatives, and so would favour anything which would give competitors an edge in attracting accountholders. We can help to neuter the CBA motivations to do this if we were to favour credit unions over the CBA member banks regardless. And, given the cost of implementing FATCA, big banks could absorb those costs better than credit unions – so I myself would prefer to help credit unions by holding my accounts, loans, line of credit, mortgages, etc. with the CUs.).
– 10,000 seems to me to be a paltry sum for a study of the scope required due to the complexity of FATCA, and NAFTA, legal and privacy issues. Caveat; I am not an academic, so perhaps someone who knows about what these types of grants would entail could weigh in on whether 10,000 might indicate that this is merely a TOKEN – so the Harper government and Finance can say they did ‘study’ the implications of FATCA. Or, perhaps the study is partly funded by the Privacy Commissioner, and there is other grant funding coming from other sources?
– whether the Privacy Commissioner study results might play into the path chosen by other countries (ex. UK) who’ve signed an IGA or signalled an intent to, where they as good as admit that the strategy for removing conflict between the FATCA demands and their own domestic privacy, human rights, etc. laws is to CHANGE THEIR OWN SOVEREIGN LAWS to conform with FATCA – an approach alluded to in several commentaries on FATCA, and some from the US Treasury (sorry, in a hurry, no cpecific references right at hand – but probably Stack’s list of FATCA ‘myths’, and other statements from Treasury.)?
Idea: just ocurred to me that we could also look back and compare the fulsomeness, tone and content of the most recent Harper government ‘answers’ to MP Hsu and Brison’s Questions posed in Parliament (Oct. 25 and 28, 2013 respectively) with those the feds gave to MP Mai to his earlier questions (Q412 posed January 26, 2012, and answered March 13, 2012 http://isaacbrocksociety.files.wordpress.com/2012/03/ba481782.pdf ) Hsu and Brison’s questions deal more with FATCA, and Mai’s deal more with CBT and FBARs.
I apologize in advance that I still am not proficient with creating my own posts. I haven’t found time to do that. . The connection will be more clear if you read through the NZ document I link to below. I am putting this here in this manner because I couldn’t defeat the settings of the PDF original in order to cut and paste and quote in order to create the document I wanted. I wanted to replace the word NZ with Canada (ex. in a Red and bolded font) in the document below from NZ Inland Revenue;
See the ‘Regulatory Impact Statement’ (September 2013) – prepared by NZ Inland Revenue
http://taxpolicy.ird.govt.nz/sites/default/files/2013-ris-arearm-bill-04.pdf at the behest of the NZ government.
I cite it here as an exercise to illuminate what potential issues, strategies, etc. Canada might or might not contemplate or weigh in our case – along with other salient issues like the vastly greater numbers affected in Canada, and the historic and long established flow of peoples – and those many with family and other ties on either side. Read the document below yourself and in your mind substitute the words Canada and ‘residents’ of Canada (in the original, an avoidance strategy used by NZ to delegitimate NZ citizenship or dual status). We know that Canada has spoken to various other countries about FATCA.
‘Regulatory Impact Statement’ (date?) – prepared by NZ Inland Revenue
http://taxpolicy.ird.govt.nz/sites/default/files/2013-ris-arearm-bill-04.pdf
You may want to forward it on to your MP, as well as MPs Rankin, Hsu, Brison, and May – as an instructive Must Read regarding the implementation of an IGA by another parliamentary democray. I think that they are informed enough to see the obvious potential repercussions and impact of any similar IGA and legislative strategy considered by the Harper government – at the urging of the CBA and its financial peers (just as the NZ document refers to the concerns of NZ banks). On a side note, I noticed that the World Council of Credit Unions continues to advocate for the repeal of FATCA http://www.risk.net/operational-risk-and-regulation/news/2326389/credit-unions-wish-fatca-did-not-exist rather than IGAs ).
In my opinion, the NZ document represents a coldblooded weighing of costs, benefits, methods of throwing NZ ‘resident’ US citizens / US taxpayers (NZ avoids referring to those affected as NZ ‘CITIZENS’ or even duals) under the FATCA bus.
Note that just as in the ‘answers’ from the Harper government to MP Hsu and MP Brison’s questions, the agencies/departments NZ consulted included their Ministry of Justice (NZ), the Privacy Commissioner (NZ), and their tax agency (Inland Revenue). NZ is also a parliamentary democracy http://www.parliament.nz/en-nz/about-parliament/how-parliament-works/our-system/00CLOOCHowPWorks111/our-system-of-government . I don’t know whether/how Canada’s system might differ. In terms of significant differences that we have already noted here, we have the most extensive tax agreement with the US, and the sheer size of the integration of the US and Canadian economies, (as well as the previously noted historically large and previously much less restricted movement of peoples in both directions across the shared border.).