CRA Draft Guidance for Financial Institutions March 06 2014
Consultation Draft – for limited distribution
March 6, 2014
DRAFT
Guidance on Enhanced Financial Account Information Reporting – Part XVIII of the Income Tax Act
Application
This guidance is released in draft to financial industry associations for comment in the context of a targeted consultation and is not for distribution to the broader public. Final guidance will be published on the website of the Canada Revenue Agency (CRA) subsequent to this consultation.Legislative changes are required to implement the “Agreement between the Government of the United States of America and the Government of Canada to Improve International Tax Compliance through Enhanced Exchange of Information under the Convention between the United States of America and Canada with Respect to Taxes on Income and on Capital”, signed on February 5, 2014. On that day, the Department of Finance also published legislative proposals for comment and the guidance being offered is dependent on legislation being approved by Parliament in its proposed form. Industry associations are asked to provide feedback on this draft guidance by April 4, 2014 to CA-LPD.AC-DPL@cra-arc.gc.ca.
Again, those affected are out of the loop in discussion / consultation.
Lets get our pitchforks and storm the doors….we can use those pretend devil pitchforks and dress in all Canadian clothes. and sing O Canada as we demand our representation.
@Calgary411
I meant no disrespect. Thanks for posting. I am just so angry at our government. The banks can eat ….
From the guidelines:
International context
1.5 The Agreement is consistent with Canada’s support for the recent G-8
and G-20 commitments to develop a global standard for the automatic
exchange of tax information. This guidance has been developed with the
international context in mind and may, if appropriate, be updated to ensure
proper alignment with an international consensus that may emerge.
How much is that fake passport for banking purposes only with your correct name and changed place of birth? How much is that fake CLN complete with a State Department embossed seal for banking purposes only?
Question: Would Canadian banks ever has access to verify the above documents? Out of privacy could the USG ever allow that to happen?
Brockers, you should all be writing your MP and asking why are they doing this away from public eyes!!
Calgary, I just wrote up something in the media thread which you may wish to post on the front page.
http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments/comment-page-6/#comment-1284287
I have downloaded and reviewed a copy. It’s actually not that bad really. By and large, the gist is “if in doubt, ask” rather than “report”. Banks “encouraged” to contact people before reporting, but obviously not required to do so. Generally takes quite liberal line on self-certification (generally assumes not a citizen). If birthplace city and state shown but not country, for example, the reference is deemed not to be “unambiguous”. By and large, gives almost every possible benefit of the doubt to non-reporting. That being said, it is interpreting a set of rules the premise of which is discrimination and invasion of privacy, so this is at best making a silk purse of a sow’s ear.
@ George
In the Brock archives (August of 2013) we had 3 threads about Ted Cruz. If he had read those he could have had his separation papers by now. It’s an easy-peasy process after all and I’m sure the $100 fee is not a hardship for him. Amazing to think we are well into 2014 and he still has not managed to shake off his Canadian citizenship yet. Thanks for the update. 🙂
Em and George,
Maybe Mr. Cruz has second thoughts on whether or not shedding that Canadian citizenship is really a good idea. It may be his ace in the hole.
There is still no explanation about how each FFI can decide whether or not they honour the $50K threshold. It does say that if a FFI implements the threshold, they don’t have to notify the CRA that they made that election.
The question also remains, if the CRA receives reports of accounts that are less than $50K, will they discard them or forward them to the IRS?
It is quite obvious that the government is either not listening or is quite content making sacrifices of you all. Now, do you wonder why roads, railway tracks and highways get blocked? Do you ever wonder why tractors go down the 401 at 20 kilometers per hour? Do you ever wonder why truckers in BC blockade and drive slow on the highways in protest? Now, you have your answer…… nobody hears you or your MP’s would have answered you long ago. Corrupt from the start, they will get their pensions though…………..
George, yes we should, giving them a link to read.
…and I will post the comparisons of the expatriation experience as I’ve done for other of your comments. Thanks — that is another we could send on to our MPs.
Even for accounts of more that $50k, the draft guidance seems to be saying that the FI should not be asking about citizenship based on birth unless an unambiguous indicium is found.
And I may have misread this, but it seems to me to say that an account that has not been examined because the FI treats it as under the threshold of $50k, does not have to be looked at more closely until it becomes high value, i.e., one million$.
It also allows FIs to not ask about citizenship for new accounts if there are no indicia in the info given upon opening it.
The language is really opaque, so I may have understood it all backwards.
If the document provided by @Calgary is still correct, those of us who represent “Industry Associations” have another opportunity to send comments to Canada Finance (April 4 deadline) on the “draft guidance” related to pending IGA legislation.
I believe that criteria for an “industry association” rep are quite broad (industrious nature, associates with like-minded people, and/or enjoys industrial music [Ministry, Rammstein etc.]) and that all Brockers and Sandboxers probably satisfy these criteria.
You can argue that this will not make a difference, but an emailed short submission commenting on the detailed “guidance” and cc’ing your MP rep shouldn’t take much time and might be helpful. If you agree, send your submission (including of course the name of your new industry organization) to:
CA-LPD.AC-DPL@cra-arc.gc.ca by April 4
There’s good news for former green card holders too. From Canada’s point of view, if you are now a tax resident and citizen of Canada, you are not a US person and do not have to tell the bank that you are. That’s not how the Americans view it — in their view unless you FORMALLY surrendered that green card it is still valid for tax purposes (useless for anything else, of course) and you are still a US person.
As unsettling and distasteful as this all is, it’s always good to find something useful in there.
Oh, and Ted Cruz? I’m convinced that his problem is he can’t prove he’s a US citizen. He was born in Canada to a Cuban father and American mother – but maybe he’s having a hard time proving that his mother is a US citizen, or that she spent enough time in the US to qualify for passing it on to him. There’s a screwball formula for that, can’t recall what it is.
If he can’t prove he’s a US citizen, Canada won’t render him stateless. And the US could deport him to Canada as an illegal alien. Just a hunch.
If Cruz has an American mother and a Cuban father, he does not qualify to run for president any more than Obama. McCain was born in Panama to two Americans. Hence he is qualified even though he was not born on US soil.
A Natural citizen is one born of both American parents, regardless of place of birth.
It has been clear all along, regardless of the millions spent and convoluted arguments otherwise, that the current occupant of the WH was not and is not eligible.
Nor would Cruz be eligible to run for president for the exact same reasons.
@Arrow
I suspected as much. It would be funny if the reincarnated Joe Mccarthy is not a US citizen.
@Furious AC .
Obama as born in the USA. There is not a doubt.
http://www.snopes.com/politics/obama/birthers/kenyacert.asp
http://www.snopes.com/politics/obama/birthers/birthcertificate.asp
http://www.snopes.com/politics/obama/birthers/ineligible.asp
I could go on and on and on and on.
as for Natural born citizen.
http://en.wikipedia.org/wiki/Natural-born-citizen_clause
Similarly, Eugene Volokh, Professor of Law at UCLA, found “quite persuasive” the reasoning employed by the Indiana Court of Appeals, which had ruled “that persons born within the borders of the United States are ‘natural born Citizens’ for Article II, Section 1 purposes, regardless of the citizenship of their parents”.[53][54]
Daniel Tokaji, Professor of Law at Ohio State University, agrees the citizenship status of a U.S.-born candidate’s parents is irrelevant.[55]
Ted Cruz[edit]
Ted Cruz (born 1970), a Republican United States Senator from Texas, has publicly expressed interest in running for president in the 2016 United States presidential election.[117][118] Cruz was born in Calgary, Alberta, Canada,[119] to a “U.S. citizen mother and a Cuban immigrant father”.[120] Although there are some uncertainties about the exact definition of “natural born citizen”, Professor Chin (see above) believes that Cruz likely qualifies for the office.[120]
http://www.advisor.ca/tax/tax-news/cra-may-ignore-fatca-trust-rules-147928
IBS rates a mention:
“A leaked document appears to reveal the Department of Finance and CRA may deviate from a tax deal struck with the U.S.
Leaked by the Isaac Brock Society yesterday, the document purportedly presents the agency’s interpretation of draft legislation which, if passed, would give force to the Intergovernmental Agreement (IGA) on FATCA signed between Canada and the U.S. on February 5…….”…..
A big thanks to our leaker.
Does anyone think that a bank will choose to question their customers about their US indicia, leaving it up to a particular bank person to make that important distinction? My feeling is that the banks will err on the side of caution and send it off anyway (but then, I’m extremely cynical).
@bubblebustin
It’s all guesswork, but I agree with you. I think the only safe bet is to have accounts at FIs that advertise they are deemed-compliant non-reporting Canadian Financial Institutions. The problem is, I doubt any will be ready to advertise that until after June 30.
Hey, I just realized I may have not thought this all the way through. I’ve been looking at opening several credit union accounts before new account-opening procedures come into effect July 1 (or earlier). However, a deemed-compliant FI only has to certify your Canadian residency, and it doesn’t matter if you are a US person. Therefore, it should be possible and easy and safe to open such accounts after June 30? That assumes that there are some FIs that actually qualify for this.
That still leaves the idea of opening accounts now while they don’t ask about US tax status, and after June 30 keeping accounts at those institutions that honour the $50K threshold.
@WhatAmI,
I think your approach is good for the interim. Once we know more, we can rearrange again. I am making several ‘appointments’ myself today.
@whitekat
I’m starting with CUs that have online applications.
Yesterday I asked Canadian Bankers Association for a copy of their response to Canada Finance request (above) for comments on IGA guidance, and explained that I could also obtain this correspondence later using Access to Information Act. Response:
Dear IRSCF,
The federal government is currently determining what changes to make to the Income Tax Act in order to implement the Canada U.S. intergovernmental agreement. We are not in a position to share any feedback that we may provide to the government.
We do have information on our website about how the IGA could affect customers of Canadian financial institutions and this will be updated as new details become available. You can find that information here:
http://www.cba.ca/en/consumer-information/40-banking-basics/597-fatca-and-the-canada-us-intergovernmental-agreement-iga-information-for-clients-
Thank you,
Another reference to leaked documents and IBS. This from Financial Post.
http://business.financialpost.com/2014/03/26/leaked-documents-show-canada-intended-departure-from-fatca-agreement-with-u-s/
Earlier this week, the Isaac Brock Society leaked the CRA’s Guidance Notes to the draft legislation implementing the IGA, which is aimed at relieving Canadian financial institutions from onerous obligations under the U.S. Foreign Account Tax Compliance Act.
Here’s the final sentence from section 8.16:
The CRA expects that financial institutions will generally attempt to cure indicia before determining that an account is reportable.
If indicia exist, a financial institution now needs to try to cure them … assuming that you yourself have already definitively excised the tumor of U.S. personhood. This operation will make it possible for you to self-certify that you can stay in their institution and not have your records forwarded for more aggressive treatment. The metaphors say it all. Cure however you can. Sauve qui peut.
“the tumor of U.S. personhood” — all too true!