UPDATE: Here is the podcast: John Richardson interviewed on AMI “Contact” May 25, 2014.
Tune in this Sunday at 7 and 10 p.m. when Contact examines the Foreign Account Tax Compliance Act. The US legislation will require American expatriates to report their financial accounts held outside of the United States. This legislation will also require foreign financial institutions to report to the Internal Revenue Service about their American clients.
Some have criticized the legislation as an invasion of privacy and Canadian sovereignty. In some cases, people with Registered Disability Savings Plans are fearful the legislation could adversely affect them.
May 25: Under the controversial US Foreign Account Tax Compliance Act all non-US financial institutions, including Canadian banks, must make information known about financial accounts owned by US expatriates. Some have called the legislation an infringement of Canadian sovereignty. Toronto lawyer John Richardson discusses the legislation, its potential impact and his reasons for opposing it.
Hear more. Learn more. This Sunday at 7 p.m. and 10 p.m. make Contact …on AMI Audio.
AMI-audio can be accessed on the Secondary Audio Program of CBC Newsworld; on Bell Aliant (ch 988), Bell (ch 049), Cogeco-Ontario (ch 596), Compton (ch 088); Eastlink (ch 394), MTS (ch 704), Novus (ch 889), Rogers (ch 196), Sasktel (ch 555), Shaw (Cable) (ch 889), Shaw Direct-Advanced (ch 288), Shaw Direct-Classic (ch 825), Source Cable (ch 110), Tbaytel (IPTV) (ch 1112), Telus (ch 889) and Westman (ch 889) and at www.ami.ca.
After its original broadcast, all Contact programs are posted on our Audio Archive.
@NativeCanadian
If America had the money to wage wars in Afghanistan and Iraq, if they have the money to help nations who need it in the form of a few billion here and there- they definitely have money to catch who they consider a tax cheat. The get a warning out to Interpol and we have already seen the swiss banker who was arrested during a holiday in an italian hotel. They are not doing this for nothing. They haven’t pulled out Fatca to stop half way there. Do you all honestly think that all they want is information? They want the money!
And where tax evasion is concerned, they have treaties with other countries to deliver the “felon” to them. Once they have the financial information from the banks, they have the means to indict. That is their proof of a crime.
The IRS is owed $3.3B by the USGs own employees and going after expensive complicated FATCA money is the answer?
http://money.cnn.com/2014/05/23/pf/taxes/federal-workers-delinquent-taxes/index.html
@George, you raise some very difficult questions. I left the question blank because I did not want to lie and say no. I don’t have a CLN and have been dual since 1978. But I will respond to the inquisition by the banks with those questions suggested by Wondering and make them see that they are discriminating on the basis of nationality and religion. Obfuscating first and hoping that I can delay the inevitable. For this to work, however, every single Canadian has to answer the same way.
As for the long reach of extraterritoriality, I do worry about arrest warrants and what the Canadian government will do. I guess I will have to claim refugee status in a church and take a stand that way. Not going down without a fight.
@Tangogirl, this self searching I think is good.
If you are asked that question to either open an account or maintain an account then I think you need to be honest with yourself.
If you do not consider yourself a US Citizen, you exercise no trappings of a US Citizen and have performed a relinquishing act, then you answer accordingly.
But again this idea of being a long term expat multi-US national is over.
@ Sasha,
Re:
I don’t have any special knowledge, but what I think is that the banks will search for what they are required to by law as per the IGA, but not waste resources by going further than that (eg. detective-style work).
Indicia for pre-existing individual accounts are listed in Annex I beginning page 20 of the IGA and the 7 indicia there don’t mention family relationships.
Re if the banks have the go-ahead to use their software to search for indicia prior to July 1st, I have no idea if they do or would or not. I suppose they can search for whatever they want to in their records at any time, but I don’t know anything about it.
I also remembered that back in the mid-20th century, id and data gathering requirements at banks (and elsewhere) in Canada were incredibly minimal compared to today.* So it’s possible your mom wasn’t even asked for id upon opening the account in the 1940s. That was possible as late as the 70s in my experience banking. And if she was, remember that there was no easy way to store data in the 40s. If there was a record in the 1940s, it probably never made it into the computer system.
Anyway, just my opinion, but I doubt the banks will do anything beyond what they have to do to CY their As, and there’s nothing in the IGA (that I’m aware of) about searching deceased people or even living relatives’ records to make connections. So, that doesn’t worry me. Although a lot about FATCA certainly does.
*[Not about banking, but this is an example from Passport Canada of how lax id requirements were last century:
“Between 1947 and 1970, Canadians could only apply for passports by mail to Ottawa. Requirements were very simple, and applicants claiming birth in Canada did not have to provide proof.”]
@ pacifica777
Thanks for your thoughts . . . they are reassuring . . . and make a lot of sense. As you mentioned I doubt that my mother’s id info. was entered into any computer, though I may close the one joint account just in case there’s a record of her birthplace.
@All
The transcript for the May 14 FINA meeting is here.
The comments of Daryl Hannah regarding the identification of US accounts and whether or not, those being reported will be notified, are extremely curious to me. And definitely get a load of Nathan Cullen trying to catch Mr. Hannah on this. I don’t believe there is any indication in FATCA or the IGA, that a “US Person” will have the luxury of being notified that their info is being sent to CRA/IRS.
I also seriously doubt if a Canadian bank will have a record of a US passport from seven decades ago.
About 18 months ago, a new employee at my bank told me they had no ID on file for me. I laughed and said “Of course you have ID for me. I’ve been a customer here for 32 years.”
Well, it turned out I opened my account in 1980 when there were minimal electronic records. Somehow, in the switchover to electronic more than 20 years ago, no record was carried forward of my ID.
So, I gave them my driver’s license and that was the end of the conversation.
@ Polly. I understand your view on this. The USA is desperate and might try anything to get at US persons world wide. Here in Canada, if they allow the USA to try to charge a Canadian for a foreign law, does it make sense to also allow Saudi Arabia to “try” their Canadian citizens who are female for having a driver’s license? To charge a US person, it would need to be in a US court. If the person is a Canadian, will they drag them onto US soil, force them into US courts and try them there? Will Saudi Arabia be allowed to do the same….. Does not make sense to me…..
@Blaze
How perfectly delightful!
Polly,
It is far more complex than you describe when you state; “For those who think they can hide out in Canada and just not pay their taxes to America an arrest warrant will be issued – it will mean never being able to travel again, because other countries will have engaged in treaties which promise to hand over “tax criminals” to America.”
What? An arrest warrant? What is your understanding of the conditions and process that would have to be met for the US to be able to issue an arrest warrant for someone legally resident in Canada? Or for a Canadian citizen inside Canada? Would Canada agree to honor such a US arrest warrant? For what kinds and severity of crimes? How does the existing tax treaty deal with US tax liabilities assessed against Canadian citizens resident in Canada? I am not a lawyer, but I know that it is far more complex than your statement.
You might want to read this article to get a better sense of at least some of the complexities involved, particularly as it might apply to duals or Canadian citizens resident inside Canada:
http://www.cswan.com/areas/business/20120601_FATCA_and_FBAR_Reporting_by_Individuals.pdf.
CANADIAN TAX jOURNAL / REVUE FISCALE CANADIENNE (2012) 60:2, 305 – 54
305
‘FATCA and FBAR Reporting by Individuals: Enforcement Considerations from a
Canadian Perspective’
by Andrew Bonham
The article is still interesting though it is now two years old and there have been significant developments re FATCA and Canada since it was published. I would like to see someone write an update to this now that the FATCA IGA was signed, although the enabling legislation is still in process and is not in force yet.
@Badger
I`m not saying that Canada will extradite. I am saying other countries will. Switzerland won’t extradite either. But Germany, France, Italy etc will.
Here’s a Moodys post from the compliance condor Mr. Roy Berg himself who acknowledges he has come under “considerable criticism.”
The Moodys post is followed by a link to Berg’s full article.
Friday, May 23, 2014
FATCA in Canada: Is the Intergovernmental Agreement a “good deal?”
By Roy Berg JD, LLM (US TAX)
On May 13, 2014, I was called to testify before the House of Commons Standing Committee on Finance regarding Canada’s legislation that implements the Intergovernmental Agreement (“IGA”) between the US and Canada concerning the Foreign Account Tax Compliance Act (“FATCA”). You may view the hearing by clicking here and my prepared remarks follow this article. I have come under considerable criticism for my support of the Department of Finance’s decision to enter into the IGA. In short, I have said, and continue to believe, that the execution of the IGA is unquestionably a “good deal” for Canada. I would like to use this short article, however, to expand on this statement and offer that the analysis in reaching the answer is more interesting than the answer itself.
http://www.moodysgartner.com/fatca-in-canada-is-the-intergovernmental-agreement-a-good-deal/
@Shovel
Thanks for posting the notice about Roy Berg’s article.
I suggest that all of you read the Berg article. It is simply unbelievable. One could summarize it in two sentences:
1. The U.S. has the right to do what it wants.
2. Canada has no choice except to comply, and an IGA is less painful compliance.
The article is generally consistent with the views of the compliance industry. But (bearing in mind that Berg is a “Homelander Abroad”, it also gives an insight into the minds (or lack thereof) of Homelanders. Something like:
The U.S.A. is good.
The U.S.A. is great.
The U.S.A. can dictate to the world.
The U.S.A. is doing a favor by allowing other countries to change their laws to satisfy the U.S.A.
Frankly, Berg sounds like the “Unofficial U.S. Ambassador to Canada” – AKA “Chief Homelander Abroad”. The mistake that Berg makes is to believe that the world of today will be the world of tomorrow, etc.
The world of tomorrow will not be the same as the world of today. The US is eroding its participation and leadership in the next stage of human development.
Human progress is possible only when people can imagine a future that is different from the present. Imagination is possible, only when people countries are not in a purely defensive mindset.
The United States of today is in a purely defensive mindset. It reminds me very much of General Motors in the 1970s (particularly in regard to “foreign” competition).
Examples:
– We must defend the USA from terrorism. In order to achieve that we will destroy our traditional values of freedom and democracy. This means that our citizens, in neither the Homeland nor abroad should have rights. We will spy on everyone. Everybody is a threat. We will not tolerate dissent. Everybody is a potential threat.
Strong countries do NOT allow others to change their fundamental principles. But, the truth is that the United States is NOT a strong country. In fact it’s so weak, that in three hours on a September day in 2001, the United States was destroyed by a group of “foreign invaders”.
The result:
From Osama to Obama.
– In defending the U.S. from terrorism, we do NOT try to understand the root causes of terrorism. We do NOT then try to mitigate those causes. No, instead what we do is send drones to attack the rest of the world to create even more enemies.
The reality:
Stupid is as stupid does.
– We make it our mission to obliterate privacy rights around the world. We instruct the NSA to spy on everybody, everywhere, all the time. It’s all for own protection. How or why would the American people tolerate this? Well, of course Homelanders are frightened little sheep. But, what is it that set the stage for all of this?
The answer:
From Facebook to FATCA – privacy doesn’t matter.
– Assuming threats to the U.S. are “foreign” we fail to recognize that our citizens abroad are unpaid and important ambassadors for our country. In fact, they are the only means we have to project a positive and humane side of America. So, what do we do?
We attack Americans abroad, treating them like criminals. We turn Americans abroad (or unpaid, best ambassadors of goodwill) into the fastest growing force of anti-Americanism. Not even Americans abroad have anything good to say about America.
The reality:
With friends like America, who needs enemies.
– We dismiss the renunciations of U.S. citizenship. We laugh them off. We say they are a myth. We say “more people are becoming citizens than are renouncing” (GM used to say, only a small number of people are buying Toyotas”. Confirming that the only issue is the size of the U.S. tax base) We diminish our citizens abroad. We ridicule them. We ignore their concerns. But, most importantly we are “willfully blind” to the broader message from the renunciations.
That message is:
The United States of America is out of touch with the reality of the modern world. But, rather than behave like a true leader (providing inspiration to the world), we would rather attempt to threaten and bully the world. A project that Barack Obama (basking in the euphoria of the Nobel Peace Prize) undertook with enthusiasm.
Countries are like businesses in at least one key aspect. They can’t exist in defensive mode forever. And that’s the biggest problem of America today.
Where will this go?
The most important news in the last week has nothing to do with FATCA, nothing to do with the NSA, and nothing to do with Michelle Obamas plea for the return of the Nigerian school girls.
The most important news is this:
China and Russia, have come together and formed a massive, massive economic partnership for Russia to supply energy to China. Why a partnership? Because in a deal this big, you become a partner and NOT just a supplier. This would be worrisome enough if the US had friendly relations with these two countries. But, the FATCA is (no pun intended) is that the U.S. is despised by both countries. Furthermore, (back to FATCA) the US is working very hard to make itself disliked even more. Now, I haven’t been able to find a clear answer to this: But, I strongly suspect that China’s payment for this energy will NOT (at least in the long run) be in U.S. dollars (setting a good example for the rest of the world). Oh and I don’t see any willingness on the part of China to “FATCA Up With The USA”. Oh yeah, and Uncle Carl Levin apparently is threatening Russia with The FATCA Sanction”.
Now back at the ranch:
Somehow these Homelanders can’t see any of this. The U.S. is like a “chicken with its head cut off – everybody knows its dead except the chicken”. But, that’s what a total lack of awareness of the rest of the world does to you.
Oh and speaking of awareness. Americans typically exist in one and only one language. Awareness and perception are largely a function of language skills. How many people in China are learning English? How many people in American are learning Mandarin?
But, what about mathematics? The world’s true universal language? We know what’s’ happening with math and America (Canada too).
Bottom line:
The more versatile your language skills (including math) the better your awareness. The better your ability to imagine and learn from others.
Now, back to Canada, FATCA and the IGAs.
The USA has gone the way of Britain and the other great empires of the world. The reason: when the focus becomes defense and NOT growth (which is possible only if you get along with the world), it’s over. Historians agree that Rome (as a significant power) ceased to be so, long before the “decline and fall” was “officially recognized”. The U.S. is over.
Canada is at a crossroads. The future of Canada is better than the future of the USA. It is smaller, more flexible, more tolerant and (once the Harper government is given the boot) better able to adapt to to the 21st century and beyond. Canada is NOT in “defensive mode” (at least to the irreversible extent that the U.S. is. Canada also has a more flexible (even with all its problems) more flexible kind of domcracy. U.S. democracy is so dysfunctional (destroyed by the toxicity of party politics) that it can’t make the changes that it so desparatey needs). Could CBT or FATCA even be changed given the democratic paralysis in Washington?
At this moment in time – at the FATCA Crossroads – Canada has the chance to establish itself as a “world leader”. But, to do so, it must NOT tie its fortunes to the fortunes of the U.S.
To suggest as Roy Berg does, that Canada has no choice except to surrender to the U.S. is somewhere between wrong and ridiculous. That said, FATCA has created a difficult moment for Canada. The issue is NOT really about the U.S. and FATCA. The issue is one of “imagination”. The issue is one of leadership. The issue is one of recognizing Canada’s potential for leadership. But, all of this requires “imagination”.
As I said at the beginning:
“Human progress is possible only when people can imagine a future that is different from the present. Imagination is possible, only when people countries are not in a purely defensive mindset.”
Martin Luther King was able to imagine change, describe that vision and inspire people to share that vision.
Gandhi was able to imagine change, describe that vision and inspire people to share that vision.
Imagination and leadership is possible.
Canada needs imagination, but that of course requires “leadership” which is sorely lacking in Canada today.
Back to Roy Berg:
I’m sure he is sincere. But, it’s like this:
“You can take the man out of the homeland, but you can’t take the hojmeland out of the man!”
Thanks for your post Roy.
I won’t be too hard on poor Mr. Berg. He alone inspired my promotion to Chief Jingo of Canada.
I will simply say again what I said at Maple Sandbox. There are two key points. “We are Canadian citizens. Mr. Berg is not.”
I hope that “jingoistic, hyperbolic rhetoric” is good enough for Mr. Berg.
On second thought, the Chief Jingo doesn’t care what Mr. Berg thinks. I do, however, find it intriguing he immigrated to Canada in June of 2011–just before many of us had our OMG moment. Hmmmm.
@USCitizenAbroad: Thank you for your knowledgeable, insightful and eloquent post. I hope Mr. Berg reads it.
@MuzzledNoMore: Mr. Berg will likely dismiss USCitizenAbroad’s post as more “jingoistic hyperbolic rhetoric.”
Berg is out of his mind. His rationale for doing the IGA is to avoid the ‘sanction’ tax and allow Canadian banks to carry on as usual.
The US is like the school yard bully who says to another student if you give me all your money (or data) then I won’t beat you up.
What is the difference really? Berg enjoys being shakedown.
Hi Muzzled,
Can you please contact me?
Thanks,
Stephen
@USCitizenAbroad
Great post. I never cease to be amazed by the thoughtful, intelligent, insightful posts of so many who post here. If only our government were comprised of people with such wisdom, I would be a lot more relaxed, content and confident that they would do the right thing.
From what I have heard credit unions do not a have a record of where you are born only whatever ID usually the only record they have which usually is your driver’s licence, hydro bill etc. something with your address on. What they have depends on what you gave them when you opened your account. It is the CRA who will be requesting your birth info based on a request from the IRS to the CRA. There is no requirement, except as a courtesy by the credit union to inform you that your financial info has been sent out. This is because you agreed to their privacy policy which allows sharing between your financial institution and the CRA. In effect when you agreed to the privacy you agreed that this info could be shared. Also the CRA can take money directly out of your accounts for Canadian taxes you owe. The bank told me this.
one more thought, when you open an account at a financial institution you agree to the privacy and sharing of information policy. ? they must all have a similar policy of sharing info with the CRA. Perhaps this is the reason why the IGA is written as it is – that the CRA will share your info- no need to get info directly from the banks when every account holder has already given permission to send info ?freely with the CRA and no notice necessary?
Simply unbelievable:
The pretzel logic of the Compliance Industrial complex Homelander:
Berg says;
“…… First, when a mugger demands “your money or your life,” I’m glad to exchange $35 and a Tim Hortons’ coupon for the chance to wake up in the morning. Shame on the mugger for forcing this decision on me, but a rational person would conclude that the mugger has offered me a good deal.”
No, a rational person would conclude that a crime has taken place, and that they were victims of an unlawful act, and report it to the police. The rational person does not say; “wow, I got a really good deal because I survived the crime, no problem, I’ll just continue to factor mugging into my lifestyle, treat it as the new normal, and accept it as inevitable”. And following Berg’s line of reasoning comparing a mugging to FATCA – enshrining the right to mug into law (but only a certain mugger who threatens sanctions if thwarted) , and the obligation to assist in giving the mugger personal information as to the location and assets of victims, and then enacting legislation to make the mugging legal, by overriding any and all Canadian laws against it is an irrational and illogical conclusion.
I’m thinking that even his clients will find the reasoning that FATCA is a good deal hard to swallow. Unless they are all Canadian bankers and their cousins. They might swallow the line that FATCA is inevitable, so lie back and enjoy it, but will they be gullible enough to feel that it is
rational to?
It’s like telling his customers OVDI is a great deal, because the IRS will only take 27.5% of the max balance instead of 300% and he’s happily charge them fees to go through that great deal.
I am disgusted by such lawyers. He obviously has a vested interest in all this.
And I don’t know where he gets “the US has the right to impose sanctions for non compliance”.
I really doubt this would stand if this were to be brought up in international court. Of course they can. But that doesn’t mean this would be legal. I’d love to see it contested.
And once a mugger realizes that Mr. Berg thinks getting mugged was a great deal compared to not waking up the next morning that mugger will be sure to let all the other muggers know what a rational person Mr. Berg is and where he can be generally located.
Canada is full of dual citizens from all over the world. Do we want to advertise that we are good candidates for a mugging by a foreign government? Hell no. We want to fight and show the world that even if our government is weak we are strong and our court system will not allow us to get mugged even though self serving people like Mr. Berg thinks it’s a great idea.