The American Citizens Abroad Global Foundation has launched its educational program with a forum/debate on the merits of Citizenship-based taxation vs. Residence-based taxation.
This is a full day event, sponsored and organized by the ACA (American Citizens Abroad), that will be held at the University of Toronto on May 2nd. Registration and Information
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‘This is the first public debate — worldwide — devoted to this important topic.’
Donation of US$50 prepaid with the reservation or C$60 cash only at the door.
Student discount – C$10 cash at the door with valid student ID
The speakers will include academic tax specialists Bernard Schneider and Michael Kirsh, who have different approaches to the taxation of US citizens abroad, with the program moderated by Toronto lawyer John Richardson.
Dr. Stephen Kish, who co-authored with Mr. Richardson a submission to the U.S. Senate Finance Committee (see below), will be the academic host.
Bernard Schneider:
The End of Taxation Without End: A New Tax Regime for U.S. Expatriates, Virginia Tax Review, Vol. 32, No. 1, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2186076
Michael Kirsch:
Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, October 23, 2013, Florida Tax Review, (Forthcoming), Notre Dame Legal Studies Paper No. 1457, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346458
Richardson/Kish:
John Richardson, Willard Yates, Stephen Kish, Request for Tax Rules Changes for U.S. Citizens Overseas: Submission to the Senate Finance Committee, January 2014, http://citizenshipsolutions.ca/wp-content/uploads/2014/01/RichardsonYatesKishJan232014SFCSubmission.pdf
Keynote Speakers
Prof. Michael S. Kirsch, Professor of Law, Notre Dame Law School
Dr. Bernard Schneider, Teaching Fellow, Centre for Commercial Law Studies, Queen Mary University of London School of Law
Phil D.W. Hodgen, International Tax Attorney, Hodgen Law Group PC, Pasadena, CA
David Kuenzi, Certified Financial Planner,® Founder, Thun Financial Advisors, Madison, WI
Charles W. Cullen III, Certified Financial Planner, ® RBC Dominion Securities, Inc., Halifax, NS
Neil Sinclair, Chapter Chair, Amcham Canada – Ontario Region
Closing comments: Jackie Bugnion, American Citizens Abroad, Inc., Director of Tax Team
Originally published on April 23, 2014
This will be a money maker for the real criminals in all of this. Unfortunately, they are greedy and need the business. Looking for honesty will be impossible for them. They will offer politically motivated opinions on Fatca and could care less about you and me.
@ Publius and Badger
I sent the following to 3 MP’s Mulcair, Garneau and Elizabeth May, Only Ms May replied
I believe that FATCA can be challenged under NAFTA, chapter 14 financial services.
FATCA imposes reporting obligations on Canadian and Mexican financial obligations which places them at a competitive disadvantage in competing for and providing cross-border financing in the NAFTA area, and constitute a non-tariff barrier to trade in financial services. The lack of reciprocity for similar reporting requirements, makes the US a tax haven to Canadian and Mexican authorities.
A similar challenge should be possible at the WTO under Sector 7, finances.
The US successfully challenged the Belgian income tax practices. The information below is easily accessible from the WTO website.
2 November 1976 INCOME TAX PRACTICES MAINTAINED BY BELGIUM
8. The Belgium income tax system is based on the principle of world-wide taxation of residents and on the source principle as far as taxation of non-residents
The US argued that Belgium tax practices, placed US institutions at a competitive disadvantage
When are the Canadian MPs supposed to vote on the budget bill? I understand that this is a prerequisite to starting the challenge.
Also, could one of the people in touch with the constitutional lawyer answer that question:
Since the law is being challenged, can he file some type of legal document requiring banks and the Canadian government to hold onto enforcing the IGA until a resolution on this is achieved?
Impatient,
The MPs voted and Bill C-31 has moved to Senate standing committees: House of Commons Vote: http://openparliament.ca/votes/41-2/99/
This is where the IGA implementation portion of Bill C-31 is: http://isaacbrocksociety.ca/2014/04/22/another-important-submission-this-one-to-the-senate-committee-on-banking-trade-and-commerce-on-omnibus-bill-c-31-which-allows-implementation-in-canada-of-the-fatca-iga/. Submissions are encouraged – the more the better.
These are links that might be helpful:
FATCA IGA negotiated and signed by Canada: http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf; http://www.fin.gc.ca/treaties-conventions/notices/fatca-eng.asp
Bill C-31, see Part XVIII and Schedule 3 (Section 99) http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=E&Mode=1&DocId=6495200&File=4&Col=1
Search: FATCA: http://openparliament.ca/search/?q=fatca&sort=date+desc
@Patricia
I sent what you wrote on your comment to my MP Charlie Angus and he sent me a reply in minutes.
He wrote:
“Thanks so much for this. We will look at it. The best person to send the tax info to is MP Murray Rankin — he is the critic on taxation matters and will be able to provide good insight. I am looking at the issue from the privacy rights of citizens. ”
I forwarded my email to MP Murray Rankin.
Cook vs. Tait
Which is now more valuable to expats?
A blue passport or a CLN
That is long-term expats, not short-term USAID-type government contractors
@Tim
You wrote:
“The pro-CBT guys I suspect will say the number of renunciants is not that significant.”
This is the moral equivalent of:
“The number of people killed while being tortured is not that significant.”
“The number of drones hitting the wrong targets is not that significant.”
“The number of people renditioned is not that significant.”
“The number of articles of the constitution being violated is not that significant.”
The list goes on and on.
@badger
Done and thanks for the addy! Didn’t see until just now.
I have decided that the very least Canada can do is require that all US embassies and consulates have a prominent warning sign out front: “Warning – applying for a passport or registration of your children in this building could subject them to a lifetime of onerous fiscal servitude. Enter at your own risk”. I hardly think the country that puts warnings on every floor that they might be slippery and every peanut butter jar that the contents may contain nuts can object to Canada asking for such a benign warning. After all, US citizenship has become the Pinto of passports: seems like a good idea at the time, but can blow up in your face when you least expect it. Sorry, I just couldn’t resist.
And in obstetrician offices: “Warning — learn about FATCA before you consider having your baby born in the USA.”
@Anne Frank and @Em,
Here is another disclosure-type legislation the Government of Canada should insist upon in response to US-imposed CBT. John Richardson and I have made this recommendation to Canada Finance:
—“Because the enforcement of “U.S. taxation” against “U.S. persons” resident in Canada makes them unable to save and invest for retirement, we recommend that: Those “U.S. persons” in Canada, who wish to marry “non-U.S. persons” be required, for the protection of their future spouse, to disclose their “U.S. personhood” to that spouse, and be required to obtain a marriage license from the Government of Canada, the issuance of which is conditional on proof of that disclosure.”
I was trying to find some reference to what had happened to London Mayor Boris Johnson and his US citizenship. He was in the press in 2006 as a result of being bounced from a flight to Mexico via the USA because he had a British passport showing a US place of birth. I suspect – he did not say – that he may have been asked if he was a US citizen and he may have been indiscreet enough to suggest that he was. At any rate, they didn’t let him on the plane and he had a very public fit about it. All of this of course is pre-FATCA and he doesn’t appear to have ever heard of FBAR. The only F-word he used was the four letter kind.
He wrote a story about it in the Spectator and publicly – in the story – renounced. I have seen no suggestion that he did anything more formal nor that anyone has sought to give him grief about it. Sounds like about 1 million Canadians….
There are Boris Johnson’s all over the place. I see the Premier of New Brunswick is another (he apparently has tried to “get compliant” for the past even though his job has certainly given him an expatriation event).
The link: http://www.freerepublic.com/focus/news/1681132/posts
Thanks for all your input, Anne Frank.
(FBAR is a four-letter word!)
@Publius and whoever mentioned the issue of US PFIC reporting and penalty regime as applied to Canadian mutual funds being a potentially WTO or NAFTA issue, you might want to read this;
http://fordhamilj.org/files/2014/04/Ray_FILJ_GettingCaught.pdf
Stephanie Ray, Comment, Getting Caught Between the Borders: The Proposed Exemption of the Canadian Mutual Fund from the Passive Foreign Investment Company Rules, 37 Fordham Int’l L.J. 823 (2014)
http://fordhamilj.org/articles/getting-caught-between-the-borders-the-proposed-exemption-of-the-canadian-mutual-fund-from-the-passive-foreign-investment-company-rules/
@badger
Very interesting article.
In the U.K., we are only allowed to invest in foreign collective investment vehicles that have the revenue agency’s seal of approval. I looked at how mutual funds in the U.K. are taxed and I can understand why no U.S. mutual fund has yet received approval for the U.K.: the internal taxes U.K. unit trusts pay seem to be much higher (the U..K. is only a tax haven if you are not a tax resident here and are so wealthy that paying $45,000 annually in lieu of tax seems like a bargain)..
Two politicians have allowed for their personal data to be mapped down to the last detail. This is unprecedented. The Speaker of the Danish parliament calls it »overdue«
http://www.newsforage.com/2014/04/danish-cabinet-minister-allows-full.html
For the first time ever, Danes are to be given a closer look at the considerable amounts of data being recorded on individual citizens, and a better understanding of what information can be mined from the personal data of private individuals.
@ NativeCanadian
I think your remark is unfounded in this case. I know several of the presenters, personally, and their intentions are certainly not to gouge anyone, including average citizens. That said, I agree that there are indeed such unscrupulous actors out there as those you refer to, and one presenter has already warned of that risk.
Not quite on topic but I thought it would be interesting to note nonetheless.
Pfizer announced this morning that they had made an indicative proposal to AstraZeneca in January to combine the two businesses. The proposal was rejected by AstraZeneca but Pfizer is seeking to reengage. As part of the proposal, Pfizer was going to become a UK domiciled company.
The US has amongst the highest corporate tax rates in the world and taxes the difference between the local tax rate and the US tax rate if profits are repatriated from overseas. Pfizer’s annual report says they hold 10-30% of their cash and cash equivalents and short-term investments in US tax jurisdictions. This means that 70-90% of the $32 billion in cash and cash equivalents and short-term investments as at 31 December 2013 are held outside the US. If the business combination with AstraZenaca is successful (or a different combination with another overseas business), that’s $21-27 billion that will never be repatriated to the US.
The process of redomiciling overseas is referred to as a corporate inversion and used to be very rare. However, increasingly, US companies are doing so to get access to profits that are otherwise “trapped” overseas. Predictably, the US government enacted legislation to “punish” the executives of companies that pursued a corporate inversion. Their stock options would be subject to an additional tax upon vesting. Equally predictably, this legislation was buried in a jobs creation act.
It seems, however, that the additional tax on vested options hasn’t proven to be a disincentive. In fact, it might be an incentive. In the case of Actavis, the board allowed certain executives’ options to vest early and then reloaded them with new options. As the Bloomberg article points out, the executives of Actavis got the best of both worlds (http://www.bloomberg.com/news/2013-12-19/actavis-managers-reap-115-million-after-buying-warner-chilcott.html).
While corporate and individual taxation are not entwined, perhaps the news that one of the US’ largest pharma companies is seeking to redomicile will prompt much needed action on both fronts.
@Seniorexpat
I think NativeCanadian was referring to compliance industry sharks, not the forum presenters.
See context before NativeCanadian’s comment.
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@seniorexpat Yes, Shovel is right. I did not mean the presenters, I meant the “tax services and lawyers” who are out to make money from Fatca. Our presenters at this debate are top notch people who have a heart. I have met several in person and I’ll say for the record that these people are among the best people in Canada. .
Another thought that occurred to me which may be a fruitful discussion topic on Friday (for those in or near Toronto, anyway): the discrepancy between the treatment of expat corporations and people. In many ways, the US treatment of people is considerably worse.
We all know the raw deal for expats. Life time fiscal slavery, form filing and the like. Some credits and exemptions, but “unearned income” (read: retirement income) essentially jungle rules with the US having its knives and forks out for a slice. Children of US citizens are treated the same. For corporations, the deal is similar: worldwide income taxed. Subsidiaries (alias “children”) essentially taxed as if they were American. There is one essential difference however: the money earned by corporate children abroad remains essentially UNTAXED until it is brought back to the US. Imagine for a moment how simple the world would be if the US gave the same treatment to its expats: you only need to file your tax returns, FBAR’s etc if you move back to the United States. At least it would make the decision tree fairly simple for the bulk of them.
There are literally trillions of dollars of US multi-national corporate earnings that are stranded offshore. Put yourself in the shoes of the CFO of one of those companies. If I bring back a billion dollars sitting in Ireland, Singapore or Hong Kong, I’ll have to pay 35% off the top and then the 65 cents I have left has to earn the same rate of return as I might get if I invested the full dollar abroad. The US has to be about twice as good a prospect to compete for investments from its own massive stable of mult-nationals. Put differently, it is easier and much more attractive for Samsung to invest in the US than it is for Apple. Who but a dysfunctional dowager in denial would design – much less retain – such a perverse system?.
As everyone knows, US corporate taxes are about the least competitive in the known world. As a result, there is a slow but steady exodus of corporations from the US. The methodology is simple enough. If a corporate group has a US parent, then the entire corporate group is subject to US corporate income tax. Arrange for a new parent company located outside the United States and presto! only the US operation is subject to US tax. The movement to do this began years ago and the IRS has slowly but steadily tossed roadblocks designed to hinder the process – in many cases, the roadblocks have been speed bumps. The wave of M&A transactions that you will have read about in the press in recent months is almost 100% motivated by looking to find ways to expatriate “legitimately” and thereafter shelter non-US income from double taxation by the US. Pfizer “taking over” UK-based Astrazeneca, Canada based Valeant taking over larger US-based Allergan. Both of these current cases are motivated significantly – if not primarily – by the desire to shelter non-US income from US taxes. The legitimacy of that motive depends obviously on where you stand. The UK and Canada stand to gain bigger head offices and more prosperous, locally-based global multi-nationals. At the price of being less grasping in their attempt to tax offshore profits, they will gain a bigger domestic tax base. The US will lose any claim to tax worldwide profits. C’est la vie (and the amounts at stake are mind-boggling).
With this fairly monstrous example of a self-inflicted tax policy wound on the books for years resulting in the steady, real and tangible loss of invaluable head offices and tax base, what chance do seven or eight million mostly middle class expats have to get enough attention from Congress to obtain a measure of justice. I suspect snowballs in hell have an opinion on that.
@Anne Frank
Yes, the problem goes by the name ‘deferred tax.’, President Kennedy tried to act against it, but,corporations lobbied heavily and there was a quiet compromise under Johnson that they could keep the money outside the U.S. Rules against deferred tax were maintained for individuals,even though we differ from U.S. companies in not necessarily having a U.S. presence.
I can see why the U.S. gets upset with the games multinationals play, but there is another side to it. In the U.K., there are real fears about U.S. companies that come in, buy up the businesses, and then renege on job promises. As such, the British press has not been that happy about Pfizer’s possible acquisition of AstraZeneca..Pfizer will be keeping its management in New York, with the U.K. getting a holding company.
Re: Ottawa info session. I live in the outskirts of Ottawa, so will definitely be attending this session. If there is anything I can do specifically to help, can someone let me know. Unfortunately, I don’t know of any free venues.
oooops. I put my last comment on the wrong post. Thanks Calgary for making note of it in the correct spot.