The following post appeared on the RenounceUSCitizenship blog. It discusses an issue which, if true, makes it impossible for Canadian citizens resident in Canada, who are also U.S. citizens to retain U.S. citizenship.
I intend to do a good bit of research on this topic (and I urge those of you with a background in this area) to provide comments. It is clear that U.S. citizenship-based taxation is a form of evil, the Exit Tax and FATCA are on a par with the most vile in history.
Furthermore, it is clear that the U.S. is using the taxation of “Americans abroad” to attack the “tax base” of other countries.
The claim/assumption that the U.S. has the “sovereign right” to tax its citizens in any way that it chooses is the same as the claim that the neighbor next door has the right to rape your wife. Of course that may be exactly what those Harper backbenchers actually believe.
Analysis suggests that Cdn retirement accounts of those Cdn #Americansabroad always subject to double taxation http://t.co/pkv1P95Zs2
— U.S. Citizen Abroad (@USCitizenAbroad) July 6, 2014
The above tweet references a comment to the Allison Christians revelation that the U.S. Treasury has no authority to enter into IGAs. Although I have not had time to research this specific issue, the questions it raises are so important that discussion must begin now. I have reproduced the comment in its entirety. See also the comments responding to this comment. If this is true, the effect is that: The retirement plans of Canadian citizens who are considered to be U.S. taxpayers will be subject to taxation in both Canada and the U.S. – pure double taxation. In other words, you work you whole life for retirement only to see the plan subject to double taxation. Assuming the truth of this (and I intend to do further extensive investigation) it is absolutely essential that you renounce U.S. citizenship at the earliest possible moment. It is my sincere hope that this commenter is incorrect. But, I will find out. I hope you are sitting down before you read this.
JC says July 5, 2014 at 10:41 pm @Bubblebustin; @Just Me; @Polly; @Moaner –
The Canadian IGA makes FATCA Canadian law ; The Canada-U.S. Tax Treaty makes US CBT permissible under Canadian law.
While there is momentum to upend the Canadian IGA, upending the Canadian IGA should be the focus. However, revision of the Canada-U.S. Tax Treaty needs focus as well.
Example, as the Canadian-U.S. Tax Treaty does not exempt from U.S. taxation Canadian retirement accounts, the U.S. laws in regards to these accounts extend over Canadian territory as if Canada were a sovereign part of the United States. Canadian retirement accounts – incentivised by the Canadian government to help Canadians save for their retirement – get their benefit neutralised and penalised when treated by the IRS as “unqualified pension plans” as if Canadians have a choice of putting money in these “unqualified pension plans” and plans deemed qualified under U.S. Law ( 401K savings and IRA and Keogh may only be accessible by U.S. residents).
Generally, the best tax breaks of either country get cancelled out by the other, under the tax treaty. The Canada-U.S. Tax Treaty needs revision to include specific mention for Canadian tax residents: exemption from US taxation of Canadian retirement accounts, Canadian family home, proceeds of Canadian life insurance, Canadian mutual funds, and include a very significant exemption threshold from taxation – a blanket exemption – for other Canadian income and assets.
Exemption may also be made against FIBAR and nonfiling penalties for Canadian tax residents.
The existing Canadian-US Tax treaty has many holes in it. One example is the new ObamaCare tax which gets put on top of all other taxes paid (and your gain in your pension account over the year gets included on top of your income to reach the threshold for this tax). This Obamacare tax law was written in a way to be exempt from any tax treaty credits!
The retirement account taxation is another example. If your income is over $105,000 you are considered a “high earner” and get taxed on the change in account value each year which gets put on top of your other income to determine a U.S. marginal tax rate that the U.S. wants to tax it at every year. If you are below US$105,000 income the U.S. wants to tax these accounts at the marginal rate when the money is taken out- similar to U.S. 401K and IRA. (Who knows what happens if you are a “high earner” one year but not the next or next many years). Here is the rub: the Canadian-US Tax Treaty does not have provision for credit against Canadian tax for any U.S. tax paid on Canadian retirement accounts – as the U.S. tax is not considered on “foreign” income.
Nor is there any credit against U.S. tax with any Canadian tax paid on Canadian retirement accounts. Plus Canadian law does not have special provision for withdrawals from retirement accounts to pay for the U.S. tax liability.
The way the tax treaty works is that each tax is considered its own silo.
For instance, with earned income the extra Canadian tax paid on income compared to the U.S. tax (as the Canadian income tax rates are higher than in the U.S.) may not be used as a credit against other taxes the U.S. has but Canada does not – such as U.S. tax on Canadian pension accounts, family home, and death tax.
In my opinion, the Canadian-U.S. Tax Treaty represents the Canadian government giving up some of its sovereignty to the U.S. government in regards to Canadians who happen to be U.S. citizens. It does not have to be this way. Canada should stand up to the U.S. in regards to its right as a sovereign country for self determination of its own people free from interference by another sovereign country.
Scary stuff! And aren’t PFIC laws a violation of our free trade agreements? In a sense, they’re forcing us to “buy American.”
I’ve come to a similar realization about my local (non-Canada) situation. I owe no US taxes on my wages at present, due to the Foreign Earned Income Exclusion, but once I retire the US will be tax my local social security and pension payments. This just doesn’t seem right. Those payments will be part of the social contracts between me and my local government, and me and my local employer. The US contributes nothing now to any of the above parties (besides harassment), but will try to confiscate part of the proceeds when I retire?
Can the people who think this is ethical on the part of the US really at look themselves in the mirror?
The U.S. has always used the formal terms of tax treaty , “to avoid double taxation”, but has always gutted them of their commonly accepted meaning. Thus the statement at the outset that the U.S. person shall be considered a tax resident of the U.S. and the signatory country. No other countries have this out.
I think a better comparison would be the example of the man who says that he may beat his wife if he wants because she is his wife. What a hellish tautology. But the notion that U.S. law is not confined to it’s own borders is one that must be denied by the other 199 other tax jurisdictions.
@Recalcitrant
Your statement that:
Agreed and this confirms the notion that American citizens are simply U.S. property. But @Recalcitrant, the idea that a man can beat his wife because she is “his” wife suggests that property right that is akin to slavery/ownership. And @Foo, you must understand that in the same way that a man who owns a cow owns the proceeds from the cow, the fact that the U.S. government believes it can tax foreign social security makes sense. Why:
U.S. “citizens” are nothing less and nothing more than the property of the United States to do with as they please.
Would be interesting to hear from one of the “free” Homelanders on this point.
The US believes in Residence Based Government Services, but thinks Citizenship Based Taxation is OK.
The USG doesn’t allow people to catch up later in life for their pensions by limiting contributions to about $15,000 per year. Again it’s what John Richardson said, ‘the US hates anything that defers.”
The USG is giving people only two choices either stay in the USD / US Financial System or renounce (hopefully without an exit tax).
Is that anyway to treat its citizens?
And as Property of the USA, we can be used as pawns, infiltrators, or “Trojan Horses”, so to speak. As Eric put it, we relegate the countries where we live to become US taxpayers:
“Well, as Prof. Christians’ post points out, Treasury certainly has the statutory authority to enter into agreements with its own taxpayers. So obviously the U.S. government must be reading the term “taxpayers” to include “foreign governments”. Seems perfectly logical: every government in the world is already being taxed by the U.S., whenever the IRS buffalos a member of the American diaspora into paying U.S. taxes on the unemployment payments, government contributions to disability accounts, or general cash handouts which those governments fund out of their own tax dollars.
So clearly foreign governments fall under the definition of U.S. taxpayers. But don’t worry, little satrapies! The U.S. has a Taxpayer’s Bill of Rights to make sure you don’t get mistreated.”
http://isaacbrocksociety.ca/2014/07/04/irs-claims-statutory-authority-for-fatca-agreements-where-no-such-authority-exists/comment-page-1/#comment-2163142
The OECD has been calling these dual “non-tax” treaties—that they needed to write anything they can so as to assure that at least one country gets its cut. No longer any concern for anything else.
Canadian retirement accounts are taxed when the benefits are paid out. Any tax paid to Ottawa and the provinces is a credit on the US tax return. RRSPs and RRIFs remain tax sheltered provided form 8891 is filed ‘in a timely manner’.
They are taxed only as money is taken out and again taxes paid in Canada are used as a credit.
Bottom line – most retirement plans are not double taxed. This of course doesn’t make the bullshit filing that is required right and doesn’t help those who didn’t know they were supposed to file.
Thanks, KalC.
I would again like to point out that although RRSPs and RRIFs are sheltered as long as each year the IRS From 8891 is filed on time, this does NOT apply to other Canadian registered accounts the Canadian government encourages us to save in: the Tax Free Savings Account (TFSA), Registered Education Savings Plan (RESP) and Registered Disability Savings Plan (RDSP).
The TFSA, the RESP and the RDSP are taxable by the USA until / if a new US / Canada Tax Treaty is ratified. Would you be working on that problem, Harper government??? Or, just continuing to spout that Canadian registered accounts are exempt — when they are only exempt for the Canadian banks and other financial institutions to have to report to the Canada Revenue Agency (CRA) — our financial information the CRA will then hand over to the IRS? If not, how about being responsible by putting a “warning sticker” on these investments for anyone who might be considered a US person?
And, Harper government, would you or any “foreign financial institution in Canada consider a full-page ad to advise US Persons in Canada or would you rather still hide it from the Canadian public? http://isaacbrocksociety.ca/2014/07/04/new-zealand-bank-asb-sends-out-its-pre-4th-of-july-fatca-roundup-notices/ and Govt ‘using asset sales to plug holes in a leaky budget’, including $5 million on implementing New Zealand’s compliance with the US Foreign Account Tax Compliance Act (FATCA)
Also see: http://www.telegraph.co.uk/finance/personalfinance/investing/10944585/British-public-footing-a-1bn-bill-to-aid-the-US-taxman.html, where the UK is catching on to the cost of their country’s treasury.
Harper government, do you have an interest in telling the Canadian public what will be Canada’s initial and yearly cost for the implementation of US FATCA intergovernmental agreement, foreign law making *US* persons second-class Canadians? Or do you prefer to continue to bury that as you buried legislation to implement the FATCA IGA in Bill C-31? Government by management — not, for sure, democracy.
Try keeping up with all of this as you age and have health issues. I certainly wouldn’t want my kid to have to deal with the ever changing flux of problems, requirements, paperwork just because his mom was American. Whatever gets cancelled out or doesn’t it’s a changing river every single year. Too easy to make a mistake and accountants fees are food for some seniors.
I concluded that due to be termed a criminal tax evader right off the bat and the fact that I wasn’t sure I was going to be able to afford or be able to keep up with all of this, that keeping U.S. citizenship was impossible whether I wanted to or not. In my life time I do not expect them to go to RBT even for long term expats. The principle resident home stuff plus FATCA was enough to send my spouse over the edge. Anything beyond those two things is just more pile on for zero tax owed. My question is if you are not wealthy how on earth do you keep your U.S. citizenship? Allison has pointed out on a very interesting Mcgill podcast that FATCA is not going to catch the big players who can afford to “restructure” it’s going after a person in Thunder Bay who probably didn’t even know they were American or didn’t know the U.S. has all these requirements for someone who might never have lived there. Enough already. Home landers aren’t treated this way.
Credit or no credit on Canadian retirement savings, you could still end up in a nursing home with your Canadian family forever on the hook for American paperwork and in flux “rules” or they too would be an “American tax cheat” Who wants to live that way? Not even home landers would put up with that much crap.
@KalC,
I am trying to stay focused just on donations, but need to comment on your statement that “most retirement plans are not double taxed.”
Like many (most?) Canadians, my “retirement plan” equals the family home I share with my wife.
Because I live in Toronto the house has appreciated in value and in terms of a foreign currency (the U.S. dollar), through no fault of mine — and when I am forced to sell that home and move to the real “home” it will be the United States Congress, and not Canada, that wants the capital gains.
Stephen. You of course are correct. I’m just trying to provide clarity here and prevent too much hyperbole and panic.There are ways to deal with the family home issue.
*Capital Gains on homes*
How do u calculate that when u are from a war torn country… I know people who left their original home countries because of wars… lost everything… but were able to *reclaim* what was lost in the war from the gov’t in later generations… how do u calculate that… Better yet… a home in your original home country that was handed down… from generation to generation… how the US calculates the capital gains on a home is not done in other countries… This issue is a nightmare for everyone… wouldn’t even know where to start the figure from or how to get help to figure it out
A probable burden to our children is right! Just imagine the responsibility of having power of attorney for an infirm parent or executor of a USP’s estate. That’s something we would not want to saddle our children with, so it looks as though we’ll need a lawyer to handle that too!
One wrong step like not reporting the sale of a home to the IRS would leave your executor with full liability for taxes owed, wouldn’t it?
@KalC
Thanks for clarifying that that “8891ized” RRSPs and RRIFs are exceptions to the principle of the double taxation of retirement planning vehicles.
And thanks to Stephen Kish for pointing that the family home (the most important retirement planning vehicle for many) NOT subject to double Canada and U.S. taxation but is subject ONLY to taxation by the U.S.
There have been many posts on the Isaac Brock Society pointing out the punitive ways in which mutual funds are subject to punitive U.S. taxation.
But so far, we have considered only those retirement/investment vehicles which are created at the initiative of the taxpayer.
Can someone comment on the taxation of various pension plans that are created by employers and that are therefore outside the purview of the RRSP and RRIF.
Example: The kinds of pension plans one would build up over a career. Typically both you and the employer would make a contribution – noting also that the contribution made by the employer would be considered to be a taxable benefit.
@KalC
How does one deal with the sale of the family home if both spouses are USC’s?
So, if I’m renouncing this year. How do I deal with the 8891 form? If I fill it out to delay taxation does it prevent me from being totally free of the US after revocation? Is it dealt with in the 8854 form? Arggh I’m drowning in a sea of double-speak forms.
Understanding just how Canadian (and other country) pension plans will be affected should be important to understand for most of us who are employed, have been employed and now retired from a company who had pension plans for their employees.
You’ve touched on this before, USCitizenAbroad: http://isaacbrocksociety.ca/2012/12/17/sun-life-prepares-to-turn-clients-over-to-irs-for-processing-bitter-end-to-a-company-with-a-proud-history/
Association of Canadian Pension Management submission to IRS: http://www.acpm.com/resources/7/media/AGR/Govt_Submission/2012/ACPM%20FATCA%20Letter%20to%20IRS%20Re%20Notice%202010_60%2025-01-2012.pdf
http://www.buckconsultants.com/portals/0/publications/fyi/2014/FYI-2014-0304-Foreign-Acct-Tax-Comp-Act-non-US-ret-plans.pdf
http://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/FATCA-Challenges-and-Insights-for-Pension-Funds-V2.pdf
http://www.tax-power.com/foreign_pensions-forms_8938,3520_and_fbars.htm
@Bubblebustin
U.S. citizens absolutely should NEVER be an executor. At a minimum, it will invite a visit from Mr. FBAR.
On the issue of the sale of the principal residence, here is how it works.
So, let’s imagine a principal residence that is owned by a U.S. Citizen abroad and spouse. I will run the example with a U.S. citizen spouse and then with a non-U.S. citizen spouse.
In order to understand this example, you must understand the following rules:
1. In the U.S. the sale of a principal residence does NOT result in a tax free capital gain. In fact is is a taxable capital gain with the first $250,000 exempt from capital gains tax. A capital gain is defined as the difference between the sale price and the purchase price. This full amount less $250,000 will be taxable.
2. The purchase price must be calculated in U.S. dollars at the exchange rate on the date of purchase. The sale price must be converted to U.S. dollars at the exchange rate on the date of purchase.
3. The discharge of any mortgage must be taken account. For example if you borrow $100,000 Canadian dollars and repay $100,000 Canadian dollars, the U.S. dollar equivalent of the mortgage must be calculated. Bottom line: if you pay back less than you borrowed in USD, then you would have a taxable gain. I tried to explain in the following post:
http://renounceuscitizenship.wordpress.com/2012/10/11/how-fluctuating-fx-rates-generate-capital-gains-taxes-on-the-discharge-of-debt-us-citizens-abroad/
4. The new Obamacare 3.8% tax (which is not creditable) must also be paid.
5. If the house were owned by two U.S. citizen spouses, who were filing jointly, then the exemption would be $250,000 times two – $500,000.
6. If the house were owned by a U.S. citizen and an “alien” spouse, then there would be only one $250,000 exemption. Furthermore, (assuming the U.S. citizen spouse was filing in the “married filing separately status”) then the Obamacare surtax would be higher. (Marriages between a U.S. citizen and a non-citizen are presumed to be a form of tax evasion).
Example 1 – Two U.S. citizen spouses
Okay, now let’s run a very realistic example. Let’s say that Charles Citizen marries Candance Citizen and they buy a house in Vancouver in 1984 for $300,000. Let’s say that the house is sold in 2014 for $2,300,000. Let’s say they are both filing U.S. taxes and their filing status if “married filing jointly”. Let’s say the house was financed with a $200,000 secured loan that they paid interest on for 30 years.
Assume the following exchange rates:
1984 – 1 USD = 2 Cdn dollars
2014 – 1 USD = 1 Cdn dollar
1984 Conversions to USD
The 1984 purchase price of the house was $150,000 USD and the amount borrowed was $100,000 USD
2014 Conversions to USD
The sale price of the house was $2,300,000 USD and the amount paid back was $200,000.
So, here is how I think it would work:
A. Calculate the capital gain:
1. Capital gain is $2,300,000 less $150,000 or $2,150,000. But because they are both U.S. citizens and they are filing jointly, they will get a $500,000 capital gain exemption. Therefore, the taxable capital gain will be $1,650,000. (Note how the exchange rate problem increases the gain.)
So, $1650,000 will be included in their income and they will pay tax on that at the appropriate (I assume long term capital gain rate of 20%).
So, 20% of 1,650,000 is $330,000. Now let’s add the Obamcare surtax which is harder to calculate because it’s based on a different definition of income. But, 3.8% applied to the whole gain would be another $62,700 (but it will be less). You get my point. That puts the taxable U.S. gain up to about $400,000.
If you look at this article there are possible ways to get it down:
http://www.forbes.com/sites/ashleaebeling/2013/09/13/how-to-beat-the-big-2013-capital-gains-tax-hike/
B. The Foreign Exchange Problem
Now on too the foreign exchange problem. You borrowed $100,000 USD and paid back $200,000 USD. In other words, you paid back more than you borrowed. Can this loss be used to offset the gain? In other words, are these treated as separate transactions or as all part of the same transaction?
Anyway, the number are unlikely to come out as badly as this. But, the point is that for U.S. citizens in Canada, the principal residence is simply NOT a tax free capital gain. This makes it difficult for U.S. citizens to be upwardly mobile in the housing market and difficult for them to plan for retirement.
Example 2 – U.S. Citizen married to an alien when the alien owns half the house. (Charles Citizen marries Anne Alien).
Same numbers but cut everything in half. The Obamacare surtax will kick in at a lower level and will therefore be proportionately higher.)
Note in this case that the non-citizen spouse pays a huge penalty for being married to a U.S. person! The U.S. person has a benefit (in this case) for having an alien spouse.
Interestingly, there has been a lot of talk lately about the inflated real estate market. Are the prices too high to buy? Should people rent instead of buy? Interestingly the answer depends on largely on where you were born.
A. If you were born in the U.S. (and therefore a U.S. taxpayer), and therefore carry an “IRS discount”, the case for home ownership is NEVER as strong as for a non-U.S. person. For U.S. persons abroad a “tax free gain” simply does not exist.
B. But, what about the effect of this on Canada? What about the problem of leakage of Canadian capital to the U.S. through the “Trojan Horse” route. In the same way that the U.S. claims to need FATCA (per Richard Harvey) to protect the U.S. tax base, Canada must protect it’s tax base from U.S. persons.
What might this mean? Well, I can easily see Canadian laws changing to stipulate that U.S. persons CANNOT be permitted a tax free capital gain in Canada. Why should Canada allow a tax free gain if the result is that the U.S. citizen simply pays tax to the IRS. Therefore, I fully expect to see the Income Tax Act of Canada amended to follow the mandatory discrimination against U.S. citizens prescribed in Bill C-31 and:
Either prohibit U.S. citizens from owning a principal residence or deny them a a tax free capital gain on that residence. The same principle will be applied to most Canadian retirement planning vehicles. After all, Canada must protect its tax base.
Just wait and see. I don’t see any Country can afford the “U.S. Person Drain On It’s Economy”.
Sounds dismal doesn’t it.
As you can see, the fact of U.S. citizenship negatively affects investment returns in life, real estate, business and marriage.
So, what can a U.S. citizen abroad invest in without complication and where U.S. citizenship does not directly affect investment returns?
As far as I can see there are only two things:
1.. Individual shares of stocks (but remember that if they are Canadian stocks the U.S. person will NOT get the benefit of the Dividend Tax Credit); and
2. A GIC.
How do you like your “freedom now”?
Footnote – I am sure that many of you wished you had known of this earlier. Make sure your children understand the risks of U.S. citizenship.
Pass on these thoughts:
http://renounceuscitizenship.wordpress.com/2012/08/21/letter-of-a-canadian-businessman-to-his-dual-u-s-canada-citizen-son-on-the-occasion-of-his-high-school-graduation/
This 2-&-1/2-year-old item is still the best single summary I know of on mismatch that can result in US tax owed by a Canadian taxpayer. Now add Obamacare.
http://usxcanada.wordpress.com/2011/12/13/2011-dec-13-valli/
Do not fixate on primary residence capital gain, or phantom currency gain, and miss all the other nasties.
@USXCanada
I remember reading this at the time. It’s interesting that this doesn’t deal with the issues of pensions either.
Do we have any statistics?
I only know there are 7 million US citizens living abroad. I also know that most of them are probably unaware of their filing obligations, hence, only 3 thousand of those renounced.
Since we can assume that majority never files their taxes or FBARs, how many people are taken to the court and convicted every year? I couldn’t not find any case online.
What you’re saying about USP’s acting as executors is true, but I was referring to non-USP’s acting as executors for the estates of US taxpayers. Any overlooked tax liability that might pop-up after the estate is paid out will become that of the executor’s.
I guess I can count myself lucky that the proceeds of the sale of our home was during the Bush tax cut era (15%) and prior to the Obamacare surtax. Those were the good old days of taxation of our principal residences, it seems! Something to consider, is that the cost of renovations over the course of the time you’ve owned the home and mortgages are deductible off the gross. Maxing out what you borrow against the home is perhaps a way of reducing the net proceeds of the sale.
Unfortunately for us, we learned of our tax filing obligations AFTER we sold our home…
It is almost impossible to get accurate statistics on anything to do with CBT from the US Treasury. I have reviewed their annual reports. If you look at the total number of returns sent in from abroad and deduct military, Puerto Rico and US Possessions (Guam, etc), or if you look at the number of returns claiming the foreign earned income exclusion you can get something of a proxy for total number of non-residents filing tax returns. It would be hard to come up with a number much above a quarter million. Long and the short of it is that long-term non-residents have not been filing tax returns to the US pretty much ever. If something like a quarter million returns are getting filed, a good number of those are from people on secondment or otherwise not domiciled outside the US (and thus would be filing even in an RBT system). As we all know, few resident expats had any idea such an outlandish requirement existed. Others were vaguely aware but figured it didn’t matter since nothing would be owing due to higher taxes in most other countries. US has not expended much effort in trying to push CBT in fact because of course in fact it generates little to no revenue relative to the costs of trying to “service” it. The real cash cow, as we have all now learned, is in the OVDI penalty streams they can exact from non-FBAR filers who owe them nothing. FATCA now offers them the opportunity to go “victim-mining” through the data for free since someone else (CRA, foreign banks) pays for the collection of it and IRS gets it for nothing.
The above numbers are from memory – I did actually spend several hours combing through the annual reports at Treasury to figure it out and gave up once I realized it was a small number. The same exercise, by the way, can be done with passports. There are a bit more than a million issues outside the US, but that includes a lot of obvious cases (PR, Guam, military, lost/stolen passport replacements for travellers). Long term expats with active US passports is not a big number either.
I don’t think anyone is going to waste their breath trying to defend CBT – they don’t have to. All they know is what the Code tells them. Nobody inside the US knows anything about CBT and in the current political climate are very unlikely to ever hear about it. They only way it will change is if they are forced to choose between an intellectually bankrupt policy with zero revenue and lots of PR headaches (abroad, anyway) attached to it vs keeping FATCA which they are beginning to think they might actually like. The Court challenge might just be the instrument – or one of the instruments – that puts FATCA at risk and causes them to reconsider this “peculiar institution” of CBT. A long shot, perhaps. However, the Court Challenge does have a good shot at getting the IGA “read down” by the court to exclude citizens and permanent residents as Parliament ultimately declined to do (for fear of US reprisals). Personally, I very, very strongly doubt the US would dare try to cancel the IGA if a court restricted it so as to avoid Charter breaches since they would be demanding the impossible (and it would be impossible in the US as well, they know very well).
Sorry for the long message – as Mark Twain once said, I would have written a short letter, but I didn’t have the time!
@USCitizenAbroad
Confession time. I am a resident of a country other than Canada. So my information may not be clued in to the various types of Canadian retirement accounts. In Australia the retirement accounts are definitely considered by the U.S. as “unqualified pension accounts” as if our country is part of U.S. sovereign territory. It appears that the Canada-U.S. tax treaty has special provision for a certain type of retirement account I need to have a closer look at – I would potentially use that information to try to get a change in the tax treaty here.
I believe the focus on retirement accounts is a good one to highlight the injustice of it all. Here every financial planner says put more money in. However, I have U.S. tax advice to minimise contributions as any account gain each year gets taxed at my marginal U.S. rate. All the other unjust taxes and regulations may be a bit too complicated to communicate – so I am thinking best to focus on retirement account treatment.
I see in Canada three separate websites covering the injustice. In this country I have not detected any debate, articles, or outrage – in spite of me trying to prompt some. So I may encourage the effort in Canada and hope for success in changes that may then get extra attention here. I have written to Canadian politicians and press.
We have an information exchange going on here. What is needed is some action plan with specific people to write to etc. The tax treaty needs revision to actually “prevent” double taxation and assert the right of Canadian self determination for Canadians. What is done there may give me ideas. The potential good (among a lot of bad) of FATCA is to finally draw (hopefully) considerable attention to the injustice of CBT.
I’ll be using recent articles in The Economist and WSJ.