397 thoughts on “The Canada United States FATCA Intergovernmental Agreement”
@Badger,
What I meant by MASS RENUNCIATIONS is more like mass recruitment for expats to go and renounce / relinquish US citizenship. The embassies and consulates need to experience a massive surge of individuals requesting CLNs.
The volume of renunciations / relinquishments has certainly been increasing, but not yet to the tipping point of political embarrassment for those holding public office.
The reason MASS RENUNCIATIONS will work is that renouncing / relinquishing US citizenship is a very sensitive national identity issue. If it were not so sensitive, the powers that be wouldn’t be putting up so many obstacles and ostracizing people for doing it (exit tax, name and shame list, Reed amendment etc.)
A tsunami of individuals renouncing / relinquishing US citizenship will make a powerful statement. It is the only real power that individual expats have.
So, from what I gather from reading the text of the agreement:
Registered accounts such as the TFSA are not considered to be reportable accounts under FATCA, and do not count toward the $50,000 reporting threshold;
however, if an American holds Canadian Mutual Funds within a TFSA, the TFSA is still treated as a foreign trust and the Mutual Funds are treated as PFIC’s under US Tax Law;
the only benefit being that the Canadian Financial Institution is not actively reporting that to the IRS; the American citizen would still be required to self-report to the IRS, along with all the irritating paperwork associated with such investments
Also, when I read the reporting threshold requirements, it mentions that a Canadian Bank can elect to report accounts under the $50,000 threshold. I would hope that all the Big Six banks stick to the ‘de-minimis’ of $50,000 and don’t go ‘above and beyond’ what is required.
I still am not clear from reading the comments what the best course of action is??
Am I understanding that one could have relinquished yet not told the DOS and that is good enough?? I see there is a new clause in the canadian iga that seems to suggest this.
It still seems to me that the CLN puts you on the radar as this info is sent to the IRS..why would you want to do this..especially if all the registerd accounts are not reported. The registered accounts are the ones most people will have more than 50 thousand in.
Watch for enabling legislation for the IGA to be included in the upcoming federal budget, to get it approved by Parliament without much discussion.
Also, watch for US approval of the Keystone pipeline shortly after Parliament approves the IGA.
If there is a lawsuit i want in and will pay my share.
@crazyworld
I agree…why ID yourself to the IRS by applying for a CLN if your bank is not going to report on registered accounts?
If you know what the rules are and stick under the $50,000 reporting threshold outside registered accounts, and don’t ‘out’ yourself to the IRS by renewing your US Passport, my take is you can effectively fly under the radar.
Granted, for me, my financial affairs make this advice easy to follow. For others, it may not be so easy.
i just heard the announcement on CBC radio news. Short and to the point. I have a headache – I think I blew a brain vessel upon hearing the news.
I am still a bit worried about my child though. It’s years to go before she can renounce and it still seems is disingenuous to me that anyone in the Canadian govt can say with a straight face that a child raised in Canadian is American or that the USG demanding that they file tax forms is anything other than extortion.
I agree. There is till a lot I need to understand in the agreement regarding our children, “accidental Americans”, including those with a ‘mental incapacity’. I will continue to WANT a way to end the absurdity.
I want my Government of Canada to stand up for all of their people. My PARAMOUNT allegiance is to my country, Canada, and I want Canada to demand they have a PREDOMINANT claim on me — and on my adult son (and all others like him who would be otherwise ENTRAPPED into a US citizenship they never laid clam to in any way). I want Canada to assert its PREDOMINANT CLAIM for my son, especially, with no interference from the US (his so-called other, never asked for, automatic citizenship by birth to me).
First of all, to my Canadian friends, I share your disappointment but remember that this was not unexpected. Not one country on the planet has, so far, affirmatively said ‘no’ to FACTA in response to the Empire. Not one.
Let me suggest that what is needed, without delay, if it has not already happened, is for representatives of IBS and Maple Sandbox, to meet Prof Hogg and others legal experts with a significant voice, and plan and file one of more legal challenges to the Government of Canada entering into this IGA. Also, force the issue to be raised and publicly discussed for opposing implementing legislation.
On the legal side, Canada is seemingly well positioned, and the lawsuit(s) will have the benefit of some very good Canadian Constitutional experts AND will get a the benefit of a lot of support from James Jatras and others on the US side.
The legal challenge must be well thought out and timely – i.e. cannot wait.
Thanks to Petros, I have been following this site for over a year now. And what was announced today, although sad and ominous, should not come as a surprise. Two immediate thoughts:
1. Isn’t it about time we as a collective (followers of IBS/Maple), come together and get legal representation? Class action, perhaps, but moreso someone who will be retained to be an authority on the interpretation of this new IGA, and who will be our representative in legal matters going forward. It’s costly, and futile, for all of us to seek individual legal counsel
2. I read through the Annex I, and am very curious about the account thresholds ($50K, $250K, <$1MM) and exempt international institutions .. we may have an out or a potential saviour if we interpret this properly. What about someone creating a Credit Union just for expats (with assets less than the thresholds stated in the Annex, of course)..
Thoughts?
What I find odd, and maybe I’m reading this wrong, but balances are as of July 1, 2014.. This gives anyone who WAS money laundering 5 months to decrease their accounts to under 50k… Jeeze
@ calgary411
I think it is safe to say that it no longer matters that OUR paramount allegiance is to Canada because Harper has given Canada’s paramount allegiance to the USA. It was an allegiance handover (long in the making), just like the banking information which will be given to the CRA will be a handover to the IRS. I’m too travel weary to try to figure this all out right now but all those so-called FATCA reporting exemptions are of no use to me. However, perhaps for your son, there is something in those. I hope it won’t be too long before Allison Christians or someone of her calibre will be providing an analysis. I just hope it will be simple enough for me to understand.
BTW, there was a nice e-mail waiting for me when I got back. It is from Ted Hsu’s office (reply to my thoughts about Q121) but of course with the IGA signed there are different questions which need answers now.
This is so much to swallow. I never thought the Canadian government would actually throw its dual US citizens under the bus like this.
Wow….
I’m quite convinced that there is nothing in the text of the IGA that would make it Charter compliant. It is discriminatory from top to bottom, and a challenge would, in my opinion, be successful.
BUT … we have not yet seen the enabling legislation, and it is entirely possible that the Harper government is arrogant enough to try and take a “notwithstanding clause” approach to this. I know, it’s never been done by the feds — and Peter Hogg suggested that it would be almost indefensible — but when did that ever slow Harper down?
I’ve sent a note to Peter Hogg, but I suspect he won’t comment until he’s thoroughly vetted it. And he may be unaware of anything Harper might try to do through legislation — they don’t let that stuff out. Hopefully we’ll know more when they put the legislation up on the web site for comment.
I am of the opinion it would not have mattered if Muclair, or Trudeau was PM either. This was probably going to happen regardless of who the Prime Minister was. They feel that it is in there “best” interest to be compliant. I am hopeful we can make some changes by challenging this in the courts. The USA needs to be told NO. Or else it will just be one continual surrendering of our sovereignty after another after another.
Now’s the time to start blanketing any articles we come across with the link to the petition to Congress to abolish FATCA . We should be able to garner more signatures this way as Canadians with US personhood will be researching more info on FATCA.
Well anyone who thought Canada would not sign an IGA was dreaming. They had to..once the Europeans signed then it was game over. If Europe and Canada both worked together and said no then the USA would have had to back down.
At some point the nations of the world will have to band together and tell the USA that enough is enough. They cant take the whole world on. Its a matter of getting the BRICS to work with Europe and Canada then its game over for the USA. But of course each nation is to chicken to do this..they feel that someone else will get an unfair advantage over them.
Lets face it..a 30 percent tax on your banks is pretty hard to ignore when the USA is the financial centre of the world.
In the end this IGA does not look so bad..the registered accounts are exempt and there is no possibility to close an account or take 30 percent from it and there is an acknowledgement of relinquishment without the CLN.
Re: Maryanne says
“This gives anyone who WAS money laundering 5 months to decrease their accounts to under 50k… Jeeze”
If anyone is really laundering money… do u think they would really hide it in a bank for a long period of time?? Money going in & out is monitored already…just in case u didn’t know…surprise… Large amounts of cash going in & out a personal accounts, I am pretty sure u are checked out. What amount are u talking about… a thousand or so…come on…who would waste time on the measly amount? When one launders cash…its usually done in a business who deals with large amounts of money… say in over $50K… that is moved all the time. Because of this fatca crap… there is a new underground economy… take cash out of bank… & know one sees it again… cash only transactions..
Renunciation of US citizenship has become a Right of Passage for American Ex-pats.
Here’s the Finance Canada news release. Apparently they did it to protect us:
Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014.
The US Government broke every single treaty they made with individual American Indian tribes until the genocide was complete.
Why should this IGA with a few watered down conditions and exemptions for Canada be any different?
Anybody know of any credit unions in BC with assets UNDER $175 million? Been searching but nothing found yet.
Congratulations Canada, and part of that FATCA will go to support the US and its war-machine. That’s less money that more of the 1+ million affected by this legislation will have to spend IN Canada to put towards our economy. This government should be put on trial for treason against the sovereignty of this nation.
Ordinary citizens trying to conduct their lives in Canada are not the tax cheats that the IRS should be looking for. Note that the US is $17,000,000,000,000 in debt with that amount rising. This Canadian here is absolutely disgusted that Canadians value their sovereignty so cheaply that they would allow their government to throw 1/35th of their economy down the tubes to a nation so far in debt that it will take the better part of this next millennium to dig themselves out. Disgusted at Canada today.
We are now effectively on the route to 51st Statehood in the Union. God Bless America… MY #$%$!!!
“Please release me, let me go
For I don’t love you any more.”
@Badger,
What I meant by MASS RENUNCIATIONS is more like mass recruitment for expats to go and renounce / relinquish US citizenship. The embassies and consulates need to experience a massive surge of individuals requesting CLNs.
The volume of renunciations / relinquishments has certainly been increasing, but not yet to the tipping point of political embarrassment for those holding public office.
The reason MASS RENUNCIATIONS will work is that renouncing / relinquishing US citizenship is a very sensitive national identity issue. If it were not so sensitive, the powers that be wouldn’t be putting up so many obstacles and ostracizing people for doing it (exit tax, name and shame list, Reed amendment etc.)
A tsunami of individuals renouncing / relinquishing US citizenship will make a powerful statement. It is the only real power that individual expats have.
Petit Suisse, of course I realize what you’re saying. But what my point is that the US has no business asking for and Canada no right to give information that does not belong to them: This is what I wrote many months ago in the following post: http://isaacbrocksociety.ca/2012/01/23/fatca-the-need-to-know-basis-is-not-satisfied/
So, from what I gather from reading the text of the agreement:
Registered accounts such as the TFSA are not considered to be reportable accounts under FATCA, and do not count toward the $50,000 reporting threshold;
however, if an American holds Canadian Mutual Funds within a TFSA, the TFSA is still treated as a foreign trust and the Mutual Funds are treated as PFIC’s under US Tax Law;
the only benefit being that the Canadian Financial Institution is not actively reporting that to the IRS; the American citizen would still be required to self-report to the IRS, along with all the irritating paperwork associated with such investments
Also, when I read the reporting threshold requirements, it mentions that a Canadian Bank can elect to report accounts under the $50,000 threshold. I would hope that all the Big Six banks stick to the ‘de-minimis’ of $50,000 and don’t go ‘above and beyond’ what is required.
I still am not clear from reading the comments what the best course of action is??
Am I understanding that one could have relinquished yet not told the DOS and that is good enough?? I see there is a new clause in the canadian iga that seems to suggest this.
It still seems to me that the CLN puts you on the radar as this info is sent to the IRS..why would you want to do this..especially if all the registerd accounts are not reported. The registered accounts are the ones most people will have more than 50 thousand in.
Watch for enabling legislation for the IGA to be included in the upcoming federal budget, to get it approved by Parliament without much discussion.
Also, watch for US approval of the Keystone pipeline shortly after Parliament approves the IGA.
If there is a lawsuit i want in and will pay my share.
@crazyworld
I agree…why ID yourself to the IRS by applying for a CLN if your bank is not going to report on registered accounts?
If you know what the rules are and stick under the $50,000 reporting threshold outside registered accounts, and don’t ‘out’ yourself to the IRS by renewing your US Passport, my take is you can effectively fly under the radar.
Granted, for me, my financial affairs make this advice easy to follow. For others, it may not be so easy.
i just heard the announcement on CBC radio news. Short and to the point. I have a headache – I think I blew a brain vessel upon hearing the news.
I agree. There is till a lot I need to understand in the agreement regarding our children, “accidental Americans”, including those with a ‘mental incapacity’. I will continue to WANT a way to end the absurdity.
I want my Government of Canada to stand up for all of their people. My PARAMOUNT allegiance is to my country, Canada, and I want Canada to demand they have a PREDOMINANT claim on me — and on my adult son (and all others like him who would be otherwise ENTRAPPED into a US citizenship they never laid clam to in any way). I want Canada to assert its PREDOMINANT CLAIM for my son, especially, with no interference from the US (his so-called other, never asked for, automatic citizenship by birth to me).
First of all, to my Canadian friends, I share your disappointment but remember that this was not unexpected. Not one country on the planet has, so far, affirmatively said ‘no’ to FACTA in response to the Empire. Not one.
Let me suggest that what is needed, without delay, if it has not already happened, is for representatives of IBS and Maple Sandbox, to meet Prof Hogg and others legal experts with a significant voice, and plan and file one of more legal challenges to the Government of Canada entering into this IGA. Also, force the issue to be raised and publicly discussed for opposing implementing legislation.
On the legal side, Canada is seemingly well positioned, and the lawsuit(s) will have the benefit of some very good Canadian Constitutional experts AND will get a the benefit of a lot of support from James Jatras and others on the US side.
The legal challenge must be well thought out and timely – i.e. cannot wait.
Thanks to Petros, I have been following this site for over a year now. And what was announced today, although sad and ominous, should not come as a surprise. Two immediate thoughts:
1. Isn’t it about time we as a collective (followers of IBS/Maple), come together and get legal representation? Class action, perhaps, but moreso someone who will be retained to be an authority on the interpretation of this new IGA, and who will be our representative in legal matters going forward. It’s costly, and futile, for all of us to seek individual legal counsel
2. I read through the Annex I, and am very curious about the account thresholds ($50K, $250K, <$1MM) and exempt international institutions .. we may have an out or a potential saviour if we interpret this properly. What about someone creating a Credit Union just for expats (with assets less than the thresholds stated in the Annex, of course)..
Thoughts?
What I find odd, and maybe I’m reading this wrong, but balances are as of July 1, 2014.. This gives anyone who WAS money laundering 5 months to decrease their accounts to under 50k… Jeeze
@ calgary411
I think it is safe to say that it no longer matters that OUR paramount allegiance is to Canada because Harper has given Canada’s paramount allegiance to the USA. It was an allegiance handover (long in the making), just like the banking information which will be given to the CRA will be a handover to the IRS. I’m too travel weary to try to figure this all out right now but all those so-called FATCA reporting exemptions are of no use to me. However, perhaps for your son, there is something in those. I hope it won’t be too long before Allison Christians or someone of her calibre will be providing an analysis. I just hope it will be simple enough for me to understand.
BTW, there was a nice e-mail waiting for me when I got back. It is from Ted Hsu’s office (reply to my thoughts about Q121) but of course with the IGA signed there are different questions which need answers now.
This is so much to swallow. I never thought the Canadian government would actually throw its dual US citizens under the bus like this.
Wow….
I’m quite convinced that there is nothing in the text of the IGA that would make it Charter compliant. It is discriminatory from top to bottom, and a challenge would, in my opinion, be successful.
BUT … we have not yet seen the enabling legislation, and it is entirely possible that the Harper government is arrogant enough to try and take a “notwithstanding clause” approach to this. I know, it’s never been done by the feds — and Peter Hogg suggested that it would be almost indefensible — but when did that ever slow Harper down?
I’ve sent a note to Peter Hogg, but I suspect he won’t comment until he’s thoroughly vetted it. And he may be unaware of anything Harper might try to do through legislation — they don’t let that stuff out. Hopefully we’ll know more when they put the legislation up on the web site for comment.
POST COMMENTS HERE…
http://www.thestar.com/news/canada/2014/02/05/canada_reaches_deal_with_us_meant_to_reduce_irs_intrusion.html
I am of the opinion it would not have mattered if Muclair, or Trudeau was PM either. This was probably going to happen regardless of who the Prime Minister was. They feel that it is in there “best” interest to be compliant. I am hopeful we can make some changes by challenging this in the courts. The USA needs to be told NO. Or else it will just be one continual surrendering of our sovereignty after another after another.
Cheers.
Reuters covers it: http://www.reuters.com/article/2014/02/05/us-usa-fatca-idUSBREA141U820140205
Now’s the time to start blanketing any articles we come across with the link to the petition to Congress to abolish FATCA . We should be able to garner more signatures this way as Canadians with US personhood will be researching more info on FATCA.
https://www.abolishfatca.com/live/
Well anyone who thought Canada would not sign an IGA was dreaming. They had to..once the Europeans signed then it was game over. If Europe and Canada both worked together and said no then the USA would have had to back down.
At some point the nations of the world will have to band together and tell the USA that enough is enough. They cant take the whole world on. Its a matter of getting the BRICS to work with Europe and Canada then its game over for the USA. But of course each nation is to chicken to do this..they feel that someone else will get an unfair advantage over them.
Lets face it..a 30 percent tax on your banks is pretty hard to ignore when the USA is the financial centre of the world.
In the end this IGA does not look so bad..the registered accounts are exempt and there is no possibility to close an account or take 30 percent from it and there is an acknowledgement of relinquishment without the CLN.
Re: Maryanne says
“This gives anyone who WAS money laundering 5 months to decrease their accounts to under 50k… Jeeze”
If anyone is really laundering money… do u think they would really hide it in a bank for a long period of time?? Money going in & out is monitored already…just in case u didn’t know…surprise… Large amounts of cash going in & out a personal accounts, I am pretty sure u are checked out. What amount are u talking about… a thousand or so…come on…who would waste time on the measly amount? When one launders cash…its usually done in a business who deals with large amounts of money… say in over $50K… that is moved all the time. Because of this fatca crap… there is a new underground economy… take cash out of bank… & know one sees it again… cash only transactions..
Renunciation of US citizenship has become a Right of Passage for American Ex-pats.
Here’s the Finance Canada news release. Apparently they did it to protect us:
Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014.
http://www.fin.gc.ca/n14/14-018-eng.asp
and…
Information Exchange Agreement Signed Between Canada and the United States
http://www.fin.gc.ca/treaties-conventions/notices/fatca-eng.asp
The US Government broke every single treaty they made with individual American Indian tribes until the genocide was complete.
Why should this IGA with a few watered down conditions and exemptions for Canada be any different?
Anybody know of any credit unions in BC with assets UNDER $175 million? Been searching but nothing found yet.
Congratulations Canada, and part of that FATCA will go to support the US and its war-machine. That’s less money that more of the 1+ million affected by this legislation will have to spend IN Canada to put towards our economy. This government should be put on trial for treason against the sovereignty of this nation.
Ordinary citizens trying to conduct their lives in Canada are not the tax cheats that the IRS should be looking for. Note that the US is $17,000,000,000,000 in debt with that amount rising. This Canadian here is absolutely disgusted that Canadians value their sovereignty so cheaply that they would allow their government to throw 1/35th of their economy down the tubes to a nation so far in debt that it will take the better part of this next millennium to dig themselves out. Disgusted at Canada today.
We are now effectively on the route to 51st Statehood in the Union. God Bless America… MY #$%$!!!
“Please release me, let me go
For I don’t love you any more.”
Who would have thought Tom Jones so prescient.