A U.S. law aimed at cracking down on tax evasion by expatriates has collectively cost Canada’s five biggest banks about 750 million Canadian dollars (US$693.5 million) in initial compliance expenses, according to people familiar with the matter.
Read more here: http://online.wsj.com/articles/canada-banks-tally-their-tax-compliance-tab-1406504252?mod=WSJ_Opinion_LatestHeadlines
Hint: if you have trouble viewing this article, try cutting and pasting the headline into a Google search.
i.e., If anyone cannot get past the log in / subscription page: go to GOOGLE NEWS; in the search box there, insert Canada Banks Tally Their Tax-Compliance Tab.
I don’t feel sorry for any large bank who won’t use their considerable power to persuade the government of their country to tell this bunch of amatuers in D.C. to Buzz off.
I have a different agenda than you and I don’t have near the support you have and I expect we will win some day soon. When I win the Tax battle doing away with the Marxist Income Tax, I will be winning your battle and you haven’t ever tried to help me with the FairTax.
If you take $750M divided by 30M Canadian population it looks like only $25 per head. However, the long term costs are much higher:
USG skimming off the Canadian tax base
Threat of changing US FATCA rules to increase loss of Canadian tax base
People hassled by US authorities who use the FATCA data as they please such as denied US entry
Third parties using FATCA data that they’ve stolen for criminal purposes
Future regulatory costs when the US imposes new rules
Dual citizens losing investments opportunities due to FATCA because they’ve been made 2nd citizens
It goes on and on.
$750M is a down payment and counting.
@Wilton Jere Tidwell re: “When I win the Tax battle doing away with the Marxist Income Tax, I will be winning your battle and you haven’t ever tried to help me with the FairTax”
Huh? The fight against a FATCA IGA in Canada, along with the fight against USA’s extraterritorial CBT is a human rights battle. If we win, you win.
Another great Malcom X quote: “Power in defense of freedom is greater than power in behalf of tyranny and oppression. Because power, real power, comes from our conviction which produces action, uncompromising action.”
RE, in the article: Canada obtained “a number of concessions” as part of the intergovernmental agreement with the U.S. One key win was the exemption of registered retirement savings plans, or the Canadian equivalent of the U.S. 401(k).
This key “win” was only saving the Canadian financial institutions from reporting on their USP for retirement savings plans. That is a savings. However, this “concession” was earned by other countries such as Australia – so not really a Canadian concession. Plus the poor souls who have these accounts still get US tax on them and still have to report them.
@WhiteKat Do you mind putting in a ‘point of information’ on that WSJ article?
Just cross-posting related comments from another post, starting at: http://isaacbrocksociety.ca/2014/06/01/its-time/comment-page-33/#comment-2379633.
Thanks for making this a separate post, WhiteKat.
Thanks, Stephen for your interviews on this — Will it wake some people up, this reality of banks costs for ALL that needs to be out there? Great coverage.
Got any way around the paywall for this one?
A U.S. law aimed at cracking down on tax evasion by expatriates has collectively cost Canada’s five biggest banks about 750 million Canadian dollars (US$693.5 million) in initial compliance expenses, according to people familiar with the matter.
The Foreign Account Tax Compliance Act, or FATCA, which took effect July 1, has banks around the globe working to meet the requirements of legislation that many countries have complained seeks to extend Washington’s reach beyond U.S. borders.
Stephen Kish says the new rules are ‘a violation of my privacy.’ Philip Cheung for The Wall Street Journal
[comment cut by editor: please do not cite articles from newspapers without a link and such that it violates copyright rules].
Write to Rita Trichur at rita.trichur@wsj.com
@JC, I’m not sure what you mean by “point of information”
@PierreD, It is hit and miss trying to get past the paywall. I got in first time by copying and pasting the headline into a google search in firefox, but that same technique did not work on subsequent tries. So, then I tried Chrome instead of Firefox, and that worked.
@WhiteKat maybe “point of information” is not 100% good application of the term, used under Robert’s Rules of Order in debating. However, the article makes it look like retirement accounts are excluded as a concession to the Canadian government. It could be pointed out that while they are excluded for Canadian financial institution reporting they are not excluded from US citizen reporting by at least two forms and not excluded from US taxation.
$750 M is just a drop in the bucket of what it is going to cost them in the customer due diligence (CDD) and the IRS formageddon that has been released on Canadian Citizens.
I don’t think they yet understand what it means to “reach out” and “cure” U.S. indicia disease….
Sometimes you have to listen to the FCC to understand the scope of the undertaking…
http://bit.ly/1qDw4Kj
The cost has just started, and wait until GATCA descends upon them. It is even more onerous.
A very simple advice to the banks: if you have any guts at all, please invoice the USG for all expenses made with a 30 day payment term.
Yes, I think the U.S. should be invoiced on this. Why should other nations pay for this program foisted upon them.
@Eric; @AtticusinCanada
Perhaps this way: The Canadian government should collect all the invoices and say every six months invoice the USG. This would be unilateral. Yet FATCA was unilateral in its imposition on Canadian banks.
The USG promised reciprocal information. Yet I have not heard of US banks asking if new accounts applicants are Canadians. Perhaps there should be 30% withholdings against the recalcitrant US banks – and use this to help cover implementation costs.
As mentioned above the initial cost estimate was just to get IT systems ready. This will only be a portion of the cost as the reporting is to be on an annual basis, there is still probably more IT to go to make it all possible. Then there will be all the expense of the notifications and trying to pose the question if account holders are USP.
“The UK Government estimates it will cost UK financial institutions up to £1.6bn ($2.7bn) to implement FATCA in this country, with ongoing costs of up to £90m ($153m) per year.”
http://www.international-adviser.com/news/tax-regulation/fatca-is-stranger-than-fiction
FATCA costs for UK banks, from the UK Telegraph:
“The cost? Initially HMRC said the implementation of the rules would cost a one-off £2bn to £3bn, followed by ongoing costs “estimated to be in the region of £100m-£170m a year”.
But last year, after the Government had negotiated a less cumbersome version of the requirements, HMRC said it expected the one-off costs to fall to £900m-£1.6bn ($1.5bn-$2.7bn), followed by an annual £50m-£90m ($85m-$153m). HMRC’s own “one-off IT and project costs” would be £5m ($8.5m), with “annual costs of £1.4m ($2.4m) incurred from 2016”.”
http://www.telegraph.co.uk/finance/personalfinance/investing/10944585/British-public-footing-a-1bn-bill-to-aid-the-US-taxman.html
Every nation/every bank should bill the USG for the compliance cost of finding and reporting ‘US Persons’ and copy the President and Congress – that would send a strong message.
Like I said before: bill’m for the real cost of implementing this legislation. I wonder though how many Governments i.e. bank CEO’s read these comments. They would be stupid if they don’t go ahead with this.
Imagine if they used that money to fight this law or to help all the dual/permanent folks !
I cant seem to get to the full article …. but …. you do realize that the expenditure of $750 Million means that that is income on which the CANADIAN Government will not collect tax from the Banks. AND to the extent that the Fatca compliance mavens are US based, selling software enhancements and so on ….. will the CANADIAN Government collect any tax at all on that portion of the money?
PierreD,
If, like me, anyone cannot get past the log in / subscription page: go to GOOGLE NEWS; in the search box there, insert Canada Banks Tally Their Tax-Compliance Tab. I was successful in opening the article that way.
The article makes no mention of the FATCA costs for Credit Unions. Those costs can be quite significant as a percentage of overall expenses. For the larger banks, FATCA compliance is almost a rounding error.
Credit Union Central’s submission to the House Finance Committee emphasized the heavy burden. FATCA and other regulations will have on Credit Unions.
Among the failures of all countries in their FATCA negotiations was the failure to seek financial compensation from the USG.as a condition of signing an IGA.
@JC, re: “…the article makes it look like retirement accounts are excluded as a concession to the Canadian government. It could be pointed out that while they are excluded for Canadian financial institution reporting they are not excluded from US citizen reporting by at least two forms and not excluded from US taxation. ”
This is a great point, and one that has been brought up before by others. Perhaps you can comment on this at the article.
The large banks can “snow” or “BS” the general public on the costs of implementation and continuing support/upgrading every year when the USA makes changes, however, the credit unions cannot hide it. I have been saying this right from the start. The owners of credit unions are going to have a panic attack when they find out how much it will coast them. hopefully, At this point, credit union customers will ask “why were we not told?” Well, the government media control worked well in keeping this a secret and are very pleased only a few found out about this. I hope the credit unions don’t go bankrupt because of their customers leaving because they don’t know what the next big secret will cost them. Those who signed this and have done all this damage deserve to be hung for treason!
@nervousinvestor
Exactly the point I wanted to make. I’m sure that banks will be able to write these costs off every which way the can (after all they’re in the money business) but as you say, FATCA implementation will result in less tax revenue for the Canadian government (taxpayers).
@Innocente – To put £2bn the British way, that’s like adding 1p or 2p on the basic rate of income tax. Perhaps 5p on the price of a pint?