Here are links provided to me by a source within CRA. Please read and provide your feedback. This is crucial information about how Canadian financial institutions will provide details about US Persons to the CRA and how Finance intends to introduce overriding legislation to enable it. This is a must-read:
The CRA has prepared documents in response to the signing of the intergovernmental agreement (IGA) related to the Foreign Account Tax Compliance Act (FATCA) to help Canadians understand the implications of the agreement from an administrative perspective. This guidance is available on the CRA website at the following URLs:
In addition, Department of Finance has also now posted on its website the Legislative Proposals and Explanatory Notes Relating to the Canada-United States Enhanced Tax Information Exchange Agreement
Here is my question (and don’t laugh, I’m sooooooooo tired)
I have been under the impression that the $50k threshold applies to one account. So one could have many accounts that are $49k and they would not be reportable. However, this makes me wonder:
VI. Special Rules and Definitions. The following additional rules and definitions apply in implementing the due diligence procedures described above:
C. Account Balance Aggregation and Currency Translation Rules.
1. Aggregation of Individual Accounts. For purposes of determining the aggregate balance or value of Financial Accounts held by an individual, a Reporting Canadian Financial Institution is required to aggregate all Financial Accounts maintained by the Reporting Canadian Financial Institution, or by a Related Entity, but only to the extent that the Reporting Canadian Financial Institution’s computerized systems link the Financial Accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances or values to be aggregated. Each holder of a jointly held Financial Account shall be attributed the entire balance or value of the jointly held Financial Account for purposes of applying the aggregation requirements described in this paragraph 1.
If you have several accounts at the same financial institution, they would be combined for threshold purposes.
Just Me has mentioned several times that FIs could ignore the thresholds as it may be cheaper for them to do so. I’m not clear yet if the thresholds in the Canada IGA are written in stone.
One more point, all dollar amounts are in US$, so the low Canadian dollar actually makes the thresholds a higher amount in Canadian dollars.
An important note for those who may not be able to travel to Toronto to hear Arthur Cockfield’s session on FATCA, at the CCLA symposium.
You can follow this online:
“..Sessions will be open to the public but they will also be recorded and broadcast via a live webcast to ensure greater accessibility. The event materials and sessions will also be available in both English and French..” http://ccla.org/home/pathways2privacy/
The session on FATCA is: A. Cockfield, Queens University, “The Privacy Implications of the Foreign Account Tax Compliance Act (FATCA).”’ at the Canadian Civil Liberties Association’s ‘Pathways to Privacy Symposium: Helping Canadians Find Pathways to Privacy’.
Queen’s Prof. Cockfield is speaking on FATCA on the second day of presentations – March 21, 2014 ( 8:30 am – 5:00 pm)
as part of the 3:15-4:30 Panel 4: Privacy and Financial Information, to be held at The Faculty Club, University of Toronto
41 Willcocks Street, Toronto ON ).
There are other sessions of pressing public and civil rights interest as well, including one on the use of drones in Canada; D. Lyon, Queens University. “Privacy Implications of the Spread of Unmanned Aerial Vehicles (UAVs) in Canada.” ( which the US wants to use to patrol the US Canada border http://www.theglobeandmail.com/news/politics/ottawa-notebook/privacy-czar-sounds-alarm-on-drones-patrolling-us-border/article610512/ ) and also issues related to social media, the internet, etc.
I note that the Canadian Civil Liberties Association General Counsel Nathalie Des Rosiers wrote to Canada’s Department of Finance on FATCA fully warning them of the privacy AND human rights implications of FATCA on December 4, 2012
http://ccla.org/wordpress/wp-content/uploads/2012/12/2012-12-04-Letter-to-Dpt-of-Finance.pdf and Abby Deshman spoke about FATCA privacy issues at the first Isaac Brock Society event http://isaacbrocksociety.ca/2012/12/28/fatca-fact-finding-forum-part-3-of-9-fatca-privacy-rights-issues-abby-deshman/
@Tricia, and @hazy, thank you for raising those important points about aggregation of balances for FATCA reporting purposes. As you, Just Me and others have noted, I don’t think we can/should rely on the 50,000. threshold. It seems so far that there is nothing that prevents the banks from over-reporting – on accounts below that right? And, when in doubt, they would err towards doing whatever they feel is in their self interest and doing what they see as most cost effective re their sifting and reporting systems – no matter the harm that comes to their accountholders. Canadian banks and their investment cousins have fully demonstrated that they don’t care what the costs are to their accountholders or to Canadian taxpayers. I am certain that they have weighed out the low probability that individuals could muster enough resources, expertise and fortitude to challenge them – even in a clear case of demonstrable legal error and over-reporting under FATCA. Our own Canadian federal government, the US and the banks are now all arrayed in a cabal to squash resistance and cover up harm to us – whether the harm is more of that ‘unintended’ kind or the harm by deliberate FATCA design.
We’d have to take on the CRA or banks for any recourse if accounts of a lower balance were reported, and that is like David and Goliath. And how would we know if the accounts had been reported in error? Even if the accounts DON’T belong to a ‘US taxable person’. The IRS and Treasury are not bound to notify the accountholder, and probably the CRA and the banks aren’t either. Who will/could hold them accountable? It should be our Canadian federal government – but they are the very ones who sold us down the river. They will do whatever they can to suppress evidence of harm that will make them look bad – even if the accountholder is in NO way legally obligated to the US. It is not in the interests of the Harper or any subsequent government to help us, or to take on the US or the banks. They have said that if we refuse to provide the requisite information, the account will be reported anyway. And what if we are NOT legally obliged because we have renounced, relinquished, or have never been a ‘US taxable person’? Well, we’d have to take on the Canadian federal government to demonstrate that harm and then what? Apparently the Privacy Commissioner is either toothless, or is hoping that legislation will be enacted to make our privacy rights evaporate so that the Commissioner doesn’t have to put up any resistance. Otherwise, why the BIG silence from that quarter?
Plus, as we know, the US can change anything in the FATCA IGAs unilaterally using the ‘last in time’ rule and there is nothing that Canada could do about it. At this point, given that the Canadian federal government has shown that it will not respect the duty of care it has towards the protection of even its own Canadian CHILDREN CITIZENS from being claimed by the US – including birthright Canadians born on Canadian sovereign autonomous soil ( as well as naturalized citizens and permanent residents), then we can expect that they cannot be counted on to bother to put up any fight or protest any changes to FATCA that victimize us further.
In general, you are a U.S. person for U.S. tax purposes if you are a U.S. resident or a U.S. citizen.
A U.S. resident would not generally be expected to include a person that has economic and social ties that are closer to Canada than the U.S.
Can I please get some comments on how this impacts U.S. tax filing obligations?
I still cannot wrap my head around the IRS terminology that makes even a non-US citizen living outside the USA a “US resident for tax purposes”. They could just have said “US slave for tax purposes”. At least it is honest and doesn’t boggle your mind trying to resolve how someone not residing in the USA is still considered to be a resident of the USA.
I believe it would refer to a green-card holder not resident in the US (until the 407 is filed).
And if the I-407 is filed but never acknowledged then one becomes US TAX SLAVE FOR LIFE.
Comments on the legislative proposal can be submitted to the Department of Finance at IGA-AIG@fin.gc.ca or to the address below. The closing date for comments is March 10, 2014.
Tax Policy Branch: Department of Finance
140 O’Connor Street Ottawa, ON K1A 0G5
Is this even worth doing? All of our comments to Finance Canada went unheeded before. Why should we believe anything will be any different this time?
@ Em. Re: “US resident for tax purposes.”
I think the reason you have trouble understanding the concept is because you have overlooked a power all governments seem to have, namely the ability to “deem”. You know, black is deemed to be white, left shall be deemed to be right, and so on. In other words, something that is clearly one thing shall be “deemed ” to be something else quite different even if it’s not.
“US resident for tax purposes” relies heavily on the concept of deeming. What they are really saying is “we want the power to take your money but we don’t want your ass physically in the country because that might cost us money”.
Too true. I would be arrested if I wrote what I “deem” the USA to be right now. And Canada too.
“WAR IS PEACE.” “FREEDOM IS SLAVERY.” “IGNORANCE IS STRENGTH.”
I forgot to mention that the power to deem is possessed by one other group besides government; namely crazy people. All of the rest of have to live in the real world!
This whole damned crap is starting to give me a major migraine. Why do I expect full-page ads from the IRS touting their whole “FATCA is GREAT” in our local rags real soon. If Harper wanted to sell-out Canada, he certainly pulled out all the stops. He sold EVERYONE down the river.
I’m just waiting for THIS ad to appear in the Vancouver Sun/Province.
@bubblebustin – in response to:“If the camel once gets his nose in the tent, his body will soon follow.”
“Once a camel is in the tent, the only way to get the camel to leave the tent is to shoot him!”
Of course…not implying anything… if any NSA and Homeland Security agents are reading.
Love the photo.
Someone asked if Registered Pension plans from employment are excluded from reporting by the FI who administers the plan: I read as ‘YES’, excluded—see ‘D’ below!
I copied from: Legislative Proposals Relating To the Canada–United States Enhanced Tax Information Exchange Agreement Enactment of Act
IV. Accounts Excluded from Financial Accounts
The following accounts and products established in Canada and maintained by a Canadian Financial Institution shall be treated as excluded from the definition of Financial Accounts, and therefore shall not be treated as U.S. Reportable Accounts under the Agreement:
A. Registered Retirement Savings Plans (RRSPs) – as defined in subsection 146(1) of the Income Tax Act
B. Registered Retirement Income Funds (RRIFs) – as defined in subsection 146.3(1) of the Income Tax Act
C. Pooled Registered Pension Plans (PRPPs) – as defined in subsection 147.5(1) of the Income Tax Act
D. Registered Pension Plans (RPPs) – as defined in subsection 248(1) of the Income Tax Act
E. Tax-Free Savings Accounts (TFSAs) – as defined in subsection 146.2(1) of the Income Tax Act
F. Registered Disability Savings Plans (RDSPs) – as defined in subsection 146.4(1) of the Income Tax Act
G. Registered Education Savings Plans (RESPs) – as defined in subsection 146.1(1) of the Income Tax Act
H. Deferred Profit Sharing Plans (DPSPs) – as defined in subsection 147(1) of the Income Tax Act
Anyone, please post if this is not correct. Thank you
Here is an application form to open a new retirement savings plan in the UK.
It requires details of: your nationality, yes/no to indicate whether you hold a green card, your country of birth, and if you hold another nationality. This type of account is specifically exempted from FATCA reporting under the UK IGA. Nevertheless, here are all of the IGA compliance requirements.
The new reality for opening vanilla retirement accounts in the brave new post-IGA UK is not pretty. The Canada IGA is similar, so this might give a clue about how opening a new RRSP or TFSA will look a year or so from now.
I had made a similar point about Fidelity and other investment account providers. The customer terms and conditions for account opening are normally the same for both regular investment accounts and ISAs. So if they ban US person customers from regular investment accounts they are also banning them from non-reportable accounts like ISAs.
I hope that investment account providers will improve their sophistication or I’ll never be able to open a new investment account. Like another account provider that returns “You have entered an invalid value” if you put country of birth = US, iii says “You have entered details which would classify you as a US Person. Unfortunately, our service does not extend to US Persons. We regret that we are unable to accept your application.” They can’t seem to process that someone born in the US may not be a US person. That’s worrying.
@Edelweiss, worrying indeed.
The ‘country of birth’ question seems particularly out of place. You can change your nationality, change your residency, and surrender a green card, but you can never change where you were born. If accounts are to be refused on that one immutable fact then even the amulet of a CLN becomes futile. It’s beyond the IGA requirements, but nobody cares. Not the banks, not the media, not civil liberties organizations, and certainly not the spineless UK govt. Entirely predictable of course, but that only makes it all the more infuriating. The UK govt knew full well that this sort of thing would happen when they signed the IGA, yet they went ahead anyway. What a gutless bunch.
@Watcher, I particularly like your phrase/metaphor “amulet of a CLN”. That is what it has/will become. Like garlic hung around the neck, or a silver bullet warding off the predations of the vampiric Extranational US Treasury and External Revenue Service.
The US is already unwilling/unable to cope with the numbers of renunciants from Canada. Ex. 9 months delay cited to me by the US consulate where I expatriated. And when the lineups of duals get longer and longer?