10 thoughts on “My plea for clarification on the RDSP and other Canadian registered savings plans: must these now be for sale and holding ONLY to Canadians who are not US-defined ‘US Persons in Canada’?”

1. Do we need any more evidence that the Canadian government is working for the banks, banks that have made themselves vulnerable to confiscation by the US Treasury by overexposing themselves to the US market?

   You have to wonder how much the banks here in Canada have valued our business at to have the Canadian government condone US tax evasion.

2. @All
   Just to give you a heads up on the latest email I got from my MP (Murray is Murray Rankin, NDP)
   “northernstar
   I am working with Murray’s office on the letter and I will send you a copy as soon as it has been finalized and sent.

   We will update you when we know when FATCA will be before parliament, however, at this time the government has yet to make any announcements. Debate nor a vote is currently scheduled and it may take months before it comes before parliament.

   To ensure due diligence, we are going to take the time to talk to experts and review the full implications of the agreement on the rights of Canadians. I realize that this bill will have implications for many of my constituents such as yourself and I thank you for your vocal input on the agreement. The government should not have kept Canadians in the dark on FATCA during the negotiations. With the agreement now public, it will be my priority to ensure that the rights of my constituents are protected and that Canadians understand the full ramifications of this agreement. I will be in touch as soon as I know more.

3. I am heartened that Calgary411 sent her to excellent letter, not only to Flaherty and Harper, but to the opposition leaders and other important “players” in the discussion and debate that one hopes is to come before committee and then before the entire House of Commons, assuming that under Harper and gang we still actually have a functioning parliamentary democracy in Canada. Which is not IMO a rhetorical question, rather it is a very real question.

   I am also glad to note that Murray Rankin, NDP Revenue Critic, is keeping on top of this issue, not only on behalf of his own constituents but on behalf of all Canadians. I would hope there are those in the Liberal benches who are doing likewise, but I have trouble believing there are any in the Conservative caucus who have the guts to stand up against their own front bench on this issue. Though maybe with the “income-splitting” split within their ranks, the prospect of a “civil war” within the Conservative caucus is more real. Though again, how many Conservative MPs have the principles and the guts to risk their own nomination papers, MP pensions, and their party’s precious “majority” in the House over this issue? There are some with the guts (they’re the ones now sitting as independents in the House, after either being expelled or after leaving under their own steam). I wonder if there are any others.

   We know there aren’t any in the Canadian Bankers Association, though … their only principle is their precious “bottom line;” they have no moral compass nor commitment to our Charter nor to human rights, at least I haven’t seen any evidence of that. But then since when has “moral banker” been anything other than an oxymoron?

4. Since FATCA increases the likelihood IRS will find out about them, clients who haven’t been filing should use the agency’s voluntary disclosure program.

   ???????Really????????? Like OVDI / OVDP which says “I am a criminal”? How many have gone into those programs and regret that mistake?

   http://www.advisor.ca/tax/tax-news/fatca-squeezes-american-clients-144741
   (The only way I would be able to comment on this is to buy a subscription to their magazine.)

   If you have U.S.-citizen clients, or clients who qualify as U.S. persons, start worrying.

   The recent deal struck between Canada and the U.S. lessens FATCA’s reporting burden on financial institutions like banks. But it doesn’t do much for your U.S. clients, notes Dan Lundenberg, a partner at Grant Thornton in Toronto.

   …
   Lundenberg notes income generated in an RRSP is exempt from U.S. tax only with proper filing to IRS.

   “A U.S. citizen with an RRSP who doesn’t file Form 8891,” says Matt Altro, chief operating officer at Altro Levy LLP, “has to pay tax to the IRS on any income earned in the RRSP.”

   But RESPs and TFSAs are never exempt. “You have to file a return and you may end up paying a little bit of tax,” says Lundenberg.

   He suggests government entities should “renegotiate the U.S.-Canada treaty and put all these registered accounts on the same level as an RRSP.”
   …
   Another sticking point is the capital gains exclusion, which has no parallel in the U.S. Lundenberg explains that if clients gain when they sell their principal residences, they don’t have to worry about tax in Canada; but they may have to send cheques to Uncle Sam.

   These mismatches in tax policy mean there are few U.S. persons living in Canada who won’t have a U.S. tax liability, says Lundenberg.
   …
   Lundenberg, who was born in the U.S. and practices in Canada, adds advisors need to be aware that an investment plan that would work wonders for a Canadian could be full of traps if the client is a U.S. person.

   One example is Canadian mutual funds, which can have adverse tax consequences in the U.S. because they fall into the Passive Foreign Investment Company category.

   “I get cold calls all the time from [advisors] wanting my business, and I say, ‘Explain to me the challenges of being a U.S. person living in Canada, and the kinds of investments I should have. If you can explain that, we can potentially have a conversation.’ Most of them can’t.”

   But RESPs and TFSAs are never exempt. “You have to file a return and you may end up paying a little bit of tax,” says Lundenberg.

   RESPs and TFSAs *(and RDSPs*)* — you may end up paying a little bit of tax, but how about those fees for the IRS forms that are required as these are “foreign trusts” in the eyes of the US IRS?

   *the little bit of tax I paid to the IRS was about $2,000 for contributions that the Canadian government put into the Canadian Registered Disability Savings Plan (RDSP) account for which I am the Holder for my son (this is Canadian taxpayer money turned over to the US IRS). I have no idea what the fee breakdown would be for having prepared by a US tax accounting firm the 3520 and 3520A’s for TFSA and RDSP.

   And, penalties for not having filed?

5. Here is how to lessen the impact of Fatca and insures a person can not be wiped out no matter what happens
   “Survey Participants Are Strongly Bullish On Gold Prices Next Week”
   http://www.kitco.com/news/2014-02-14/Survey-Participants-Are-Strongly-Bullish-On-Gold-Prices-Next-Week.html
   Your choice: The volatility of the metals market which for the near future at least is showing strong bullishness. Or 100% exposure to the banks?
   more:
   Always various opinions but gold does what it wants to for whatever reason. Could it get slammed as usual? Yes. Could it keep rebounding from its rout in the recent year? Who knows. Are your savings in danger? Yes. I say 50% should be in precious metals bought at different levels to average your position. Buy physical only and don’t put it in a lock box in a bank.
   http://www.kitco.com/news/2014-02-14/Gold-May-Try-To-Build-On-Gains-Next-Week.html

   Hope this helps people sleep at night

   Regards
   Ima Goldman

6. A friend wrote this today on Stockhouse: I love it.
   “NSA is the UGLY REAL face of American Hegemony. As far as FREEDOM is concerned, NSA is the SCOURGE of HUMANITY; an entity from HELL purposefully destroying everything ever achieved on this planet to maintain our COLLECTIVE DIGNITY, dignity resting within the bounds of now self-imposed control over any of our questionable drives related to issues of MORAL IMPERATIVE as THE basis of NATURAL LAW itself; the kind of LAW that is now almost imperceptibly imbedded in every codified set of rules embraced everywhere on this planet. NSA is but a SCOURGE methodically destroying everything what is spontaneous, honest, true, clean, and potentially invaluable to HUMAN RACE. Once again, FREEDOM of THOUGHT is in danger, and the darkest of all ages ever may be not too far ahead.”

7. @calgary411
   This is not a Canadian issue, but re “FATCA squeezes American clients”, another example of potential unfair gain by the US and loss to a foreign country’s economy as a result of US CBT has come up here in the UK. The UK government is apparently going to offer a £5000 grant to persons affected by the recent flooding (in the UK) for repair and restoration (by UK builders, electricians, etc.) of their homes (in the UK). Is this one-off benefit from HM govt taxable by the US if received by US persons (as are UK child benefit payments), thus “draining” resources that the UK has allocated to flood recovery away from the UK? I know the actual numbers of US persons will be small, but the principle remains….

8. Thanks (I think!) for pointing that out, qm. Perhaps there will be some people affected by last year’s southern Alberta floods that are US Persons who will have or are waiting for financial help from the Province of Alberta. That a penny of such money could be considered a taxable benefit for persons abroad is frightening.

9. @qm, and @calgary411,
   the issue of the US taxation of other types of our local/non-US government grants and benefits bestowed on us by our government of Canada (and the same for those in UK and elsewhere) is a very important one.

   Glad you raised and noted here the potential for the US IRS to claim flood and other disaster compensation funds. We’d have to look into it further, but given the insanity and injustice of US government behaviour, and their insistence that all of our ‘foreign’ income is fair game, I have little doubt that this would turn out to be yet another instance of injustice at the hands of the IRS and Treasury.

   Thus, in the scenario above, the victims of natural disasters that occur where they live outside the US would not only NOT be receiving any assistance (i.e. evacuation or other illusory US government “benefits”) from the US who so arrogantly claims those around the globe as ‘US taxable persons’, but those suffering from the floods or other disaster will actually receive egregious additional harm at the hands of the US IRS and Treasury – in the form of US extraterritorial taxation on Canadian or other government tax funds alloted to those suffering from floods and other disaster.

   Would make for a bit PR disaster for the US – for what it is worth. Extraterritorial taxation of flood and disaster victims would certainly underscore the predatory and unjust US system of not only providing us with no benefit outside the US, but in fact feeding off any benefits we receive from our true country of tax residence and other citizenship.

   What kind of a country is the US – if it asserts the right to tax the disaster grants of those abroad? It already claims the disability benefits, education grants, maternity benefits and unemployment of those outside the US.

   What a parasitical creature is US extraterritorial status based taxation.

10. Just another example of how CBT renders US persons incompatible with the rest of the world.