Some constituents have expressed concern regarding the U.S. Internal Revenue Service’s Offshore Voluntary Disclosure Initiative. This is exclusively a U.S. program, with the federal Canadian Government playing no part in its creation or execution.
I appreciate that many individuals are frustrated to learn that they can face penalties for previously undisclosed foreign accounts and assets. The U.S. government requires its citizens, even those living abroad, to file income tax returns and associated tax forms – even if those U.S. citizens do not have to pay any U.S. income tax because they already pay Canadian income tax, and even if they have dual citizenship with Canada. This requirement has been in place since 1913.
It is unfortunate that the U.S. maintains this requirement as most other industrialized nations have moved away from this specific measure. However, it is entirely within the purview of the U.S. government to impose such a requirement.
While it is within the U.S. government’s authority to do this, it is not good policy in my view. That is why I have directly raised the concerns of many constituents of Edmonton-Leduc like you regarding the Offshore Voluntary Disclosure Initiative with the Honourable Jim Flaherty, Minister of Finance.
Minister Flaherty has been in constant contact with his U.S. counterparts, pressuring them to understand fully their actions against Canadian residents. Below is a letter from Minister Flaherty submitted to several American papers expressing concerns on FATCA/FBAR.
– See more at: http://www.jamesrajottemp.ca/issues/finance-and-taxation/offshore-voluntary-disclosure-initiative#sthash.saRd7CJc.dpuf
He posted this on his website two years ago. I wonder if it’s worth asking him if, based on his stated position, he intends to argue that the FATCA implementation legislation be “carved out” of the budget document so he can vote against it.
That statement by Leduc was posted in March 2012 (not 2014). Since that time, we have been blessed with the ‘Streamlined’ minnow processing plant, so no longer have anything to bitch about. After all, as Leduc says, ‘it is within the U.S. government’s authority to do this’ – US citizens living in Canada do your duty to your master to the south!
From the way Leduc’s statement is worded, it sounds like he is sympathetic to our plight, but does not appear to see the immorality in CBT, nor appears to see an issue with USA imposing its immoral laws on those it considers its own, nor is there any mention of FATCA and/or how FATCA violates the rights of Canadians living in Canada. In all likelihood, like Flaherty, Leduc probably thinks everything is hunky dory now that we have the Streamlined program in place.
He forgets that us duals get to vote for or against him
Cannot hurt to remind him that these unjust laws have no application outside the United States and ask why it is that Canada is passing laws to facilitate the US gathering information to extort fines and penalties from dual citizen Canadians which the CRA has already said they will not assist in collecting? The fines and penalties alone amount to a threat to bankrupt each and every victim – why would Canada assist in that?
Exactly. USA can enact any laws they like, but have no right to shove them over the border and inflict them on a subset of Canadians. It irks me to no end, when I hear Canadian politicians repeat the mime: “So sad, but we cannot tell USA how to tax their citizens” – well yes, you can when those USA claims as ‘US tax payers’ are Canadian citizens living in Canada.
Remind him via tweets
@JamesRajotte While it is within the U.S. authority to Tax citizens abroad – fhttp://shar.es/BZ6BA Canada shudn’t be complicit with #FATCA!
I would like to correct the common misconception that CBT is somehow antiquated, and that other “industrialized” countries have “moved away” from this model. No. All other countries, with very few exceptions, have never implemented CBT. It has nothing to do with being industrialized or modern. Other countries rejected CBT because they though it was unfair, already centuries ago.
The first country to create an income tax in modern times was Great Britain in 1799. The British parliament adopted the principle of territoriality, later evolved into RBT, on the basis of justice. Later British writers confirmed this principle, and rejected CBT as unjustified:
Even the United States adopted RBT when it created an income tax for the first time, in 1861. US citizens abroad were only taxed on US income. Then some people started leaving the country to escape the Civil War that had just begun, as it happens in any country under a civil war. In the minds of congressmen at the time, these people were traitors and had to be punished, and Congress had the perverse idea of implementing this punishment through taxes. So, in 1864, the income tax law was changed to subject every US citizen to the same system regardless of where they lived. That’s when CBT started. The entire income tax was suspended between 1895 and 1913, but the international aspect never changed. CBT did not start in 1913.
When other European countries started creating an income tax, they copied the same model from the UK. Later, as European colonies became independent, they copied the tax system from their parent countries, and other countries copied it from their neighbors. As a result, practically the entire world rejected CBT.
There were a few exceptions. Mexico copied CBT from neighbor US when it created its income tax in 1929, and the Philippines copied the US tax code when it became independent from the US in 1946. Later, both of them realized the unfairness and impracticality of CBT, and abolished it in 1980 and 1997, respectively.
Various highly authoritarian regimes also implemented CBT as a means of maintaining control over those who wanted to leave the country. The Soviet Union, Bulgaria, Vietnam and Myanmar adopted CBT, and later abolished it as the country became more open or democratic. Eritrea also adopted CBT when it became independent in 1993, and still applies it. The Eritrean government is a typical example of a tyranny as it has never implemented its constitution or held any national elections.
In sum, CBT has nothing to do with being antiquated or pre-industrialized. The few countries that ever adopted it did so as a punishment, illegitimate control, or as an inadvertent copying mistake that was later fixed. I repeat: the vast majority of countries, developed or not, never used CBT because they easily recognized that it would be unfair.
“within the purview”, “within the U.S. government’s authority” all are just euphemisms for saying that the U.S. has the right to do what it wants to do with regards to taxation of its citizens. Even if the U.S. actions are a human rights violation. It is a violation of the U.N. Charter of Human Rights to effectively use a nation’s tax code as a means of preventing people from freely leaving and entering their country of origin.
For everyone to turn a blind eye at the fact that the U.S. has taken for itself a right to apply its laws on an extraterritorial basis while the U.S. at the same time denies the same right to other countries is the height of stupidity. Political economy does not permit one country to implement its laws inside the jurisdiction of another sovereign nation. The U.S. knows this but it refuses to acknowledge is aided and abetted by the fawning leaders of other nations.
Given this logic then there is no such thing as human rights violations because any government can pretty well do to its own citizens whatever it likes.
“The fines and penalties alone amount to a threat to bankrupt each and every victim – why would Canada assist in that?”
Because Canada is a gold producer and the metals industry is huge here and crucial to our economy. Our Government is doing us a favor by waking us up to the reality of the folly of depending on depending on the paper (polymer now) trash they put out there and brainwash the morons in the general public that it’s valuable and should underpin their daily hopes, activities and careers. We are so lucky here that we are ahead of all those pathetic creatures that inhabit the mall and the ticky tacky boxes they call “homes” and we all own gold coins and bars. So there is no danger of anyone here ever becoming bankrupt. We have REAL money. Worry not but let these people figure it out:
so what did we learn over the years?
“…with the federal Canadian Government playing no part in its creation or execution.”
Creation, I’ll agree with but execution? It can’t be put into play without the help of the CRA and the Canadian govt’s okay. And, Canada could have said, “Not our citizens, which could have spared the duals at the very least.”
and your point is? they ain’t gonna listen to whinging. The Government of the USA is rife with Nazis, yes Nazis. The USA financed Hitler, in fact Prescott Bush aided the enemy with huge monetary transfers. So why would anyone here, unless they are delusional, think that the Zebra has dropped its stripes. Yawn. The best we can hope for is all out war with Russia and China where the USA meets its maker. That’s the very best this world can hope for. Meanwhile, although personally I’m not partisan, in the interim we can hope the Repugnicans win the mid terms and take over the Senate and send FATCA down Mama Obama’s toilet. Here’s how it’s stacking up for the defeat of FATCA and every other fascist fanatical nazi piece of legislation that goon in das Weiße Haus has thrust on good people everywhere
Actually there is another hope. This is very scary and something everyone needs to watch as I’m sure no one has seen anything like this in their lives
I understand a lot but not everything about FATCA.
I live in NZ and am NZ/US Citizen. I am US tax compliant (to the best of my knowledge) and am due to inherit US funds.
I am concerned about the American indica of funds over 50 thousand. It will be a one off transaction and I do not want to give my details through FATCA to the IRS or the bank although I will file an FBAR and tax return when required. I am concerned about the following:
Will the NZ bank accept and clear the funds?
Will they withhold?
Will my info be passed without my consent?
What problems does anyone foresee?
Any advice appreciated
Advice? Sure, get rid of US citizenship if you live permanently outside the homeland. The sooner, the better because the pipeline for getting CLNs is getting really backed up.
@JustMe — James Rajotte retweeted this https://twitter.com/FinanceCanada/status/431146469111103488 so I would guess he is in full agreement with the IGA.
Mr Rajotte, it is entirely within the purview of the Eritrean government to impose such a requirement.
@Shadow Raider – Wow! Fascinating stuff, and so well laid out. Thanks for sharing. It’s important to call people out on this very important point. Bookmarked for future reference.
Yes! I cringe all to often when I read the mediaspeak statement that “most other industrialized countries have RBT”. It suggests that while CBT may be unpopular, the USA is only one of several industrialized countries which have CBT, which is of course an utter and complete lie.
Thank you so much, Shadow Raider, for your excellent summary of the development of CBT and for the important 19th century quotes that illustrate the moral ground upon which the world’s RBT systems are based.
Pingback: Cook v. Tait 15: Why did the Soviet Union, Bulgaria, Vietnam and Myanmar adopt CBT? | U.S. Persons Abroad – Members of a Unique Tax, Form and Penalty Club