UPDATE Robert Wood has posted this today here. This is an excellent opportunity for us to bring this to public attention. Please go over and comment!
“The Business of Life” http://t.co/Dcl7rlqzyj
— U.S. Expat Canada (@USExpatCanada) September 10, 2014
Some Brockers who have been around a long time have likely seen this before. However, given the recent events such as greater focus on “Accidental Americans” (Ginny & Gwen as plaintiffs on the ADCS-ADSC lawsuit), and the attempt to get the IRS to relax the rules against the same, (ADCS-ADSC retention of Mr. Jim Butera, Partner, Washington D.C office of Jones Walker LLP, to explore legal options) this letter is especially compelling.
This message is written by a Canadian businessman to his son at the time of his high school graduation. It is a perfect example of what all parents with dual US/CDN children should be aware of and discussing with their kids before they begin to acquire money and assets. It was originally posted here and is re-posted with permission.
*****
The Isaac Brock Society recently featured a discussion about how and when to advise young people about the potential problems of U.S. citizenship and whether they should consider renouncing U.S. citizenship. As parents, teachers, mentors and friends we should pass on to our young people the benefits of our (in varying degrees) knowledge, wisdom and experience. We do this because we want to equip them with the skills they need to make the best life decisions that they can.
The books: “Letters of A Businessman to His Son” and “Letters of A Businessman to His Daughter“, by G. Kingsley Ward, are wonderful examples of this principle. They are chock full of practical advice and thoughts on – the only business that really matters – “The Business of Life”.
I have been inspired by Mr. Ward. Here is the letter (with many factual modifications to protect the young person in question) that I wrote on the occasion of that young person’s High School graduation.
“Letter of a Canadian Businessman to his Dual U.S./Canada Citizen son on the Occasion of his High School Graduation”
Dear Dave:
Word cannot express how proud I was as I watched you walk on the stage and receive your graduation diploma. Tears came to my eyes then and tears come to my eyes now as I write you this letter. Seems like just yesterday, that I walked with you to your first day of school. I know you were frightened that day. But, I will now confess you to you, that I was even more frightened. I knew that you were at the beginning of a long journey to prepare yourself for a life. These years have been a great adventure for you and for me. We have had our ups. We have had our downs. But, today, your graduation, commemorates part of your success (your dad wants to think that part of it is “our” success). Today marks the end of one chapter of your life and the beginning of a new chapter.
This new chapter of your life will begin this fall when you start the Commerce program at Queen’s. Congratulations on that 95% average that made you one of the best students in Canada. Queen’s commerce is open to only the best students in Canada. And you have certainly proven yourself to be in that group. A commerce degree from Queen’s will give you:
– excellent mentoring in morality and ethics
– excellent career opportunities
– excellent opportunities for graduate school
– excellent networking opportunities
– excellent opportunities to develop long term personal relationships
So, the world is truly your oyster, or to take a line from an old movie:
“Seize the day!!”
Or as Spock from the Original Star Trek (sorry, but I still think the original is the best) series would say:
“Go forth and prosper”
Last night, was a night of celebration. It was also a night of projecting into the future. I couldn’t help but to notice everybody talking about careers. What would people do? Where would they go? A career will contribute to your life. But, it is not your life. A career does NOT a life make. I can honestly say, particularly at this moment, when I take so much pride in your achievements, and feel so much love for you, and thank you for being a fine son, that:
It will be your family, friends, and other personal relationships that will be most important to you.
And yes, your career will contribute to those things. But, you are more than your career. Never confuse having a career with having a life!
On that note, I would like you to consider two things that could have a profound impact on your future. These are: (1) “good citizenship” and (2) “your citizenship”.
On the question of “good citizenship”, I remind you that:
“To whom much has been given, much is to be expected.”
You have been given much (and earned much). People like you, have the obligation to contribute to the “well being” of our society. This can be done in many ways. But, remember not everybody has had the opportunities that you have had, and will have. There are many who have not had the benefits of your good fortune. Many of those who have had your good fortune, have not taken advantage of that good fortune. Through a combination of “nature” and “nurture” you find yourself in a strong position. That is your reality. Some are in a very weak position.
As a former U.S. president said:
“A country that cannot care for it’s weakest citizens, cannot protect its most powerful citizens”.
You have a moral obligation to bring your intellect, vision, enthusiasm, effectiveness and generosity to your career, your family (present and future) and your community. You have an obligation to be help our “weakest citizens”. Helping others can be one of the greatest values of your education.
“Good citizenship” includes a consideration of how your behavior impacts your community. “Good citizenship” also includes a consideration of how your behavior impacts on you present and future family.
Now, I would like to reflect with you on “Your Citizenship”.
Yes, you are a Canadian. Yes you have lived almost your whole life in Canada. You can and should take pride in being a citizen in one of the greatest countries in the world. But, you may recall that you were born in the U.S. This great event happened when I was doing my MBA at Stanford. (Actually, you probably don’t recall being born, but it did happen in Palo Alto, California.) What does being born in the U.S. mean? It means that the U.S. considers you to be a U.S. citizen. You lived in the U.S. until you were 4. My career brought our family back to Canada where we have lived ever since. In fact, I suspect that you have no memory of those early years of your life. Therefore, it is possible that you don’t think of yourself as being a U.S. citizen at all. You are legally a “dual citizen” of Canada and the U.S.
Is your dual citizenship a good thing or a bad thing? Given that you have lived your whole life in Canada, is your U.S. citizenship a “benefit” or is it a “burden”?
The time has come to consider whether you want to go forth in life as only a Canadian citizen or as a dual Canada/U.S. citizen. This is a decision that you will want to consider carefully, and when you are ready, you must make that decision. You do NOT need to make this decision today or next week. But, I urge you to make this decision before finishing your degree at Queen’s. I will explain why in this letter.
U.S. citizenship is the source of opportunity, liability and disability.
You are probably wondering what I mean. As the great lawyer, Gerry Spence, once said:
“Let me explain you!”
Opportunity/ Benefits of U.S. citizenship:
You have the right to live in and work in the the U.S. This may be a benefit to you. This is something that most of your classmates at Queen’s will not have. You may want to retain U.S. citizenship, in order to keep that option open. But, as you will learn in your commerce program, options are never free. They come with associated costs. In the case of U.S. citizenship it comes with certain liabilities and certain disabilities. It is important that you understand the liabilities and disabilities of U.S. citizenship. You may or may not, see these “circumstances” as being costs. If you do view them as costs, then you must ask whether the option of retaining U.S. citizenship is worth those costs of the liabilities and disabilities.
Liabilities of U.S. citizenship – Burdens of U.S. citizenship:
You have the obligations to:
– register for the military service (“the draft”);
– pay taxes to the U.S. and pay those taxes under the same rules that apply to U.S. residents;
– file U.S. tax returns every year regardless of where you live;
– file numerous “information returns” which may include the private and financial information of others.
– pay estate and gift taxes
Now, you may ask “so what?” Let me try to explain to you why this might matter in your life. But, once again, these are just some thoughts. I leave it to you to decide whether these are considerations that are significant to you.
Registration for the Draft:
Other than the obligation, this is not likely to mean much. Your chances of being called for military service are slim.
Filing Tax Returns Every Year:
You will have to file U.S. tax returns regardless of where you life in the world. The U.S. is the only country in the world to tax its citizens regardless of where they live. This can be very financially (thousands of dollars every year) and emotionally (lots of worry and time) expensive. Although, you will get some relief from double taxation, the theory is that U.S. citizens are taxed twice – both in their country of residence and in the U.S. Furthermore, it is getting more and more difficult to find professional help that is competent in this area.
Being Taxed According To The Same Rules That U.S. residents are taxed:
It’s one thing to be subject to U.S. tax. But, it’s quite another to be “taxed” in exactly the same way that U.S. residents are taxed. Let me explain. The rules for calculating taxable income are different in the U.S. than they are in Canada. The U.S. taxes different things in different ways. There are numerous instances in which the U.S. taxes income, that has not even been earned or received. Furthermore, a number of ways of saving for retirement, that are sanctioned and encouraged in Canada, are punished under the laws of the United States. This can make normal financial planning very difficult, very expensive and in some ways, almost impossible. In this respect, U.S. citizenship (especially for those who do not live in the U.S.) is a clear disability. But, more on the “disability” issue later.
Filing Information Returns:
In addition to the basic tax returns, the U.S. requires that a number of additional information forms must filed. These forms include lots of personal financial information about you and about your future family. Basically, any bank or financial account that you have signing authority over (including joint accounts) are required to be reported to the IRS. This could make a future wife or future business partners (who are not U.S. citizens) very uncomfortable and subject her to great unfairness. To put it another way:
There is NO financial privacy in the United States and U.S. citizens have no financial privacy whatsoever!!
I might say that the U.S. is very serious about receiving all information about your assets. The fines for non-compliance can be life altering. During 2011, many U.S. citizens living outside the United States suffered mightily after learning about these requirements. These information returns (forms) are not a small job. They can take hours and hours to complete at great expense. Furthermore, they cannot be completed with the assistance of a qualified accountant or lawyer.
Disabilities of U.S. citizenship: Let’s consider these from the perspective of career, financial planning, family and community.
Let’s start with family:
Future Wife:
Your mother and you children have been the greatest source of happiness, purpose and security in my life. I am sure that you will want a family of your own. It probably won’t be long before you meet a fine woman, with whom you wish to embark on that great adventure of life. Even by the standards of your generation, you are likely to embark on that adventure in the form of marriage. Since you do not live in the U.S. the chances are high that your future wife will not be a U.S. citizen.
Now, the U.S. requires its citizens to require various information returns with the IRS. If you have a joint bank account with her (which is common) you will be required to report much of her financial information to the IRS. I assure you that she will not be happy about this. Furthermore, should you predecease your wife, she will NOT be able to automatically receive all of the family estate in the same way that she could if she were a U.S. citizen. Is this fair to her?
Future Children:
Now, I am not completely sure of this, but the fact that you were born in the U.S., and are a U.S. citizen, might make your children U.S. citizens. Is this an opportunity for them or is it a problem? Only you can decide. But remember, that unless they were to live in the U.S., (assuming they are U.S. citizens), they will be subject to all the legal opportunities, liabilities and disabilities, that I am describing.
Future Business Relationships:
You are going to make some great connections at Queen’s. Your next four years will set the stage for long term business opportunities. These include partnerships and opportunities to own shares in Canadian companies. As a U.S. citizen you will be required to disclose information about these partnerships and corporations to the IRS. . For this reason, (quite understandably) many non-U.S. citizens are unwilling to enter business relationships with U.S. citizens.
Future Employment Opportunities:
Companies outside the U.S. are becoming increasingly reluctant to employ U.S. citizens. The reasons include the high costs associated with U.S. taxation and the danger that the U.S. employee, will be required by U.S. law to disclose financial data of a non-U.S. company to the IRS. Once again, this will include the obligation to report the private financial information of non-U.S. citizens to the IRS.
Possible inability to access normal financial accounts if you live outside the U.S.:
Yes, this is becoming problem. U.S. laws impose high financial and legal costs on non-U.S. banks who have U.S. citizen customers. For example, there are countries in Europe that will no longer allow U.S. citizens to have bank accounts or receive mortgage financing. It is unclear what the Canadian situation will be.
Enough on the possible problems. I remind you that U.S. citizenship does carry some opportunities. You must consider whether U.S. provides you with opportunities that outweigh those problems.
To Renounce U.S. Citizenship or to Retain U.S. Citizenship – This is the decision that you must make:
Let’s explore what each option means.
Remain A U.S. Citizen – and assume the liabilities and disabilities
Now I hate to repeat myself but:
You are subject to all of the requirements I outlined. You will be disabled from saving and investing for retirement in the same way that other Canadians can.
Examples of some “disabilities” include:
– you will not be able to invest in many non-U.S. investments;
– you will not be able to use a business corporation to hold investments;
– you will not be able to invest in a principal residence tax-free the way that others can
– you will be subject to the U.S. estate and gift taxes (making certain aspects of your life difficult)
– your (I assume) non-U.S. wife will be at a great financial disadvantage should she become a widow (is this fair to her)?
– etc.
Renouncing Your U.S. Citizenship – freeing yourself and future families of the liabilities and disabilities of U.S. citizenship:
Should you decide to renounce your U.S .citizenship, you should realize the following:
U.S. citizens who have a net worth of two million dollars or more must pay the U.S. government an “Exit Tax”, should they renounce. This can be very very expensive. For those subject to the “Exit Tax” the financial penalty can so great that they feel trapped and unhappily remain a U.S citizen. At this stage in your life, you might think that a net worth of two million dollars is a lot of money. The truth is that is is not. Furthermore, (given the realities of inflation), you will are likely to achieve that level of net worth quite quickly. Our Toronto home, where you sleep every night, is probably worth two million dollars.
Therefore, if you decide to renounce your U.S. citizenship, you should do it now rather than later!
This decision does not have to be made today or tomorrow, but should be made by the time you graduate from Queen’s!
I began this letter inviting you to think about “Good citizenship” and “Your citizenship”. “Good citizenship” includes a consideration of how your behavior affects your family, friends and community. Is it possible that “Your citizenship” might affect your obligations of “Good citizenship” (particularly in relation to family)?
You are headed towards a great future with loads of opportunity. Your U.S. citizenship is an “accident of birth”. I encourage you to deal with this issue NO LATER than than the end of your four years at Queen’s.
I am proud of you, love you and wish the best for you!
Seize the day!
Dad
Above video: When Chris Hedges rails against the current government; you know that things have really gone to hell in a hand-basket.
http://www.truthdig.com/report/item/ralph_nader_was_right_about_barack_obama_20100301
Hedges is as liberal as they come and frankly if he’s saying this about Obama; then the last support keeping this administration from falling into the chasm is starting to corrode irreparably.
I experienced anti-Americanism when I was 12 and moved to Canada, however the comments I heard were based more on stereotypes than actual disdain for current US policy. Children are remarkably adaptable (and gullible) and it didn’t take me long before I replaced my belief that the US was the best country on earth with one equally as ignorant in Canada.
As angry as I am with US policy attacking it’s emigrants, I have to resist the temptation to encourage my own American born grandchildren here in Canada to feed into the stereotypes that will only serve to make them victims, rather than give them the strength they need when contemplating what US citizenship really means to them in the future. It’ll be a tough one.
Robert Wood has reposted this letter:
http://www.forbes.com/sites/robertwood/2014/09/12/dear-son-why-you-should-leave-america-now/
Good opportunity to post some comments there to help shape the debate.
@Domino
“Ultimately, the purpose of my comment was to highlight the horrendous scenario facing my 16 year old daughter, and my moral dilemmas as a father in attempting to advise her.”
I think there are tough decisions to be made, and it’s sad and abusive on the USG’s is putting you in a position where your family has such tough decisions to make. But I think ultimately it is you–and not your daughter–who is going to have to make the tough call here. At least if I understand the situation correctly, this trust isn’t really about your daughter. It is something that you set up to help your mother. Your daughter wasn’t involved. I think you are involving your daughter in a decision that shouldn’t involve her.
Don’t get me wrong–there may be very good reasons aside from the trust for your daughter to renounce US citizenship. But the trust IMHO shouldn’t be her primary reason for renouncing US citizenship. She should follow her heart, and if her heart is in America, that’s where she should go, even if the consequences are that she needs to come off the trust.
Excellent article! I am delighted that I waited till I was in my 30’s to have children and my children will NOT be infected with my citizenship. The US needs money and at the end of the day this was never about catching those with offshore accounts, but finding the funds to refuel their economy’s recovery. I deeply resent that they are taking form my country’s recovery (mine, my neighbours, my employer’s, my children’s future)!
Ann #! Welcome to Isaac Brock. Your story is an important part of how the US laws over regulate, punish, discriminate against US citizens abroad. It is also about US limitations on career and business prospects for any US person abroad and their children: Re: signatory authority on employer account. I would like to see more information about this story such as how many trust/business accounts are involved and an est compliance cost per account. I have already told this story once yet would like more details. I saw your post on the Robert Wood story today.
It all sounds quite frightening.
I have suggested a business track to this website that would contain such business/employment related stories. I have also suggested a virtual ‘Chinese Democracy Wall’ on which stories/letters from US Persons abroad may be pinned. No doubt this story would be in a business section.
I believe FATCA is supposed to be phased in over a few years. Let us know of any notices from any financial institutions. The Canadian-US tax treaty should protect Canadians from requirement of such reporting.
@Ann
IMHO you relinquished when you became a Canadian citizen.
I’m not sure I understand your comment about waiting until your 30’s to have kids, though. Since you left the US as a child, your kids born in Canada would NOT be US citizens, regardless of when they were born.
JC, I have advised my employer of the situation and suggested that I be removed from all accounts. He is going to be speaking with The Law Society. The banks do not know that I was born in the US. Not sure where I go from here! He can NOT provide with the IRS with details about his accounts without contravening Canadian privacy laws in regards to his clients, who are CANADIANS. For example if the IRS asks “Your firm made a deposit for $700,000.00 today. Where did that money come from?” ” It was a conveyance matter. My client purchased a house.” Then does the IRS have the right to know the name of the client and his\her’s contact?. He is looking into the matter. I have spoken with a Canadian accountant who does US tax returns. If I get a letter, then I will be looking to sue someone over breach of my privacy as that accountant is not required to report what I have told their firm.
@Ann
“He can NOT provide with the IRS with details about his accounts without contravening Canadian privacy laws in regards to his clients, who are CANADIANS.”
No he can’t comply. But IMHO you should be taking the lead by not complying either. You’ve refused to perform your duties for a Canadian law firm based solely on an American law. The problem with all of this is that Canadians may resent the American intrusion, but they still comply. This won’t stop until Canadians stop complying.
Sorry to be a bit hard on you but this is a frustration I’ve often had reading people’s stories on here. Canadians resent it, they are angry, but at the end of the day they do what the American government wants. That behavior has to stop if FATCA is to be defeated.
Dash, I’m just hopping mad! I relinquished when I chose Canada! You want me, come get me! YOU PROVE THAT IT WASN’T MY INTENT TO RELINQUISH. Me and thousands of others! What are ya going to do with us if you don’t even have money to run the country???
@Ann Not a happy story. How does thus affect your employment at the firm and career prospects? If you are not doing your duties then who is? No doubt this will put you in a bit of limbo that may go on for some time.
You have every right to be outraged at the U.S. government meddling with the lives of Canadians who work for Canadian businesses with no dealings with the U.S. This is not about being a US Person and ‘living the dream.’ It sounds like more how being a US person is a nightmare rather than making the dream run better.
I think that as you have now felt forced to relinquish your signing authority that your business would be in the clear. If you now ask a compliance industry person then they may advise you about how to comply. As said previously, you may not be a US person – depending on your circumstances – best to ask other Brockers here about this. If say your firm got an inquiry from a “FFI” about who is signing on the accounts then the answer would then be no US persons. Also what I believe is happening is focus on new accounts with increasing focus on existing accounts above certain threshold values over say the next 1 to 1.5 years. The legal action of ADCS and fatcalegalaction may still be continuing then. Let’s hope for the Republicans to gain the Senate in November, if they do not, then onward and upward for legal action.
Anne#1. I’m afraid you’re not listening. You are not a US person. You have no need to mention your accounts or anyone else’s. You need have nothing to do with the IRS.
Duke, I am listening. I DO believe I have relinquished, BUT I have a huge amount of respect for my employer. I don’t want him to suddenly be blind sighted. Like I said, Come get me! Me and thousands of others who firmly believe we relinquished. Prove that it wasn’t our intent! What will they do with all of us? I did comment today on Robert Wood’s blog because I want Americans to understand what they are trying to do to us! My Uncle who was in the Us Army for 32 years said to me, “Why are you worried about this? I thought you took Canadian citizenship?” He didn’t understand that they want to claim us still.
Ann#1 Thank you. I’m pleased for you.
“Sorry to be a bit hard on you but this is a frustration I’ve often had reading people’s stories on here. Canadians resent it, they are angry, but at the end of the day they do what the American government wants. That behavior has to stop if FATCA is to be defeated.”
Exactly. I want the Americans to get so fucking pissed off that they revoke EVERY single American expats’ citizenship. But we all know that’s not going to happen because the absolute truth of the matter is that THEY WANT OUR MONEY! And they’re going to cloak it in terms like “tax cheats, un-patriotic Americans…etc” while the intelligence-challenged mob south of the border turns around and laps that up like the “brain-dead, mind-controlled lackeys” they are.
As a Canadian (born, bred and raised in Canada) I take absolute exception to the fact that the Canadian government is too blinded to the fact that the US Imperialists want nothing more than to take over Canada (preferably by subversion) and signed an IGA with the United States government while stating platitudes like “The Americans are our friends” – logic that boils everything down to a simplistic two-year old comprehension level. If Canadians are at that intelligence level, then we truly are as sorry of a mess as the United States. No, we cannot advocate VIOLENT rebellion, but we can certainly tell the United States to go to hell by not complying with what they want. If they want us that bad. Come and get us…with an invasion…then maybe the rest of the world will wake up to the fact that the US IS NOT OUR FRIEND.
@Ann#1
Now that your lawyer employer has been advised of your possible “USness” and that your “possible USness” (or that the U.S. might possibly consider you to be a “U.S. person”), your employer has an obligation to remove your signing authority from the law firm trust accounts. If he/she fails to do, your employer is risking compromising the very “solicitor client privilege” one expects when retaining a lawyer.
Put it another way:
Your employer needs to be concerned about his/her liability.
I would think it would be a fairly simple matter for you to just “make out all the cheques” but ensure that they be signed by someone else.
The law of FBAR really consists of three things:
1. The enabling legislation – which does require the reporting of all accounts, but also allows for Treasury to make regulations exempting certain persons.
2. Regulations – which have the force of law and DO allow Treasury to exempt certain classes of persons. A few years ago, Treasury very deliberately and specifically refused to exempt Americans abroad.
3. The Form (what would you expect from “Form Nation”) which is the lens through which most people view Mr. FBAR. (Starting this year, Mr. FBAR – Fincen 114 – is filed at the Financial Crimes site of Treasury. This confirms that the U.S. government believes that all U.S. citizens abroad are criminals.)
A couple of years ago, the following post appeared on this site – “Looking for Mr. FBAR – In Search of FBAR Fullfilment and Consciousness.”
http://isaacbrocksociety.ca/2012/02/15/looking-for-mr-fbar-in-search-of-fbar-fullfilment-and-consciousness/
The post could also have been titled “FBAR For Dummies”.
I suggest that you have a look at it. The comments add a great deal of substance to the post including this comment by Roger Conklin:
http://isaacbrocksociety.ca/2012/02/15/looking-for-mr-fbar-in-search-of-fbar-fullfilment-and-consciousness/comment-page-1/#comment-8846
Now, I have not checked to see if there are any updates to the regulations that exclude law firm trust accounts (I suspect that there are not).
Up to until 1989 many Canadian provinces required Canadian citizenship to be admitted to the bar. I suspect that many believed that the requirement of Canadian citizenship served as a mechanism to keep U.S. citizens out of the legal profession in Canada. Hmm….
@JC, re; “I have suggested a business track to this website that would contain such business/employment related stories. I have also suggested a virtual ‘Chinese Democracy Wall’ on which stories/letters from US Persons abroad may be pinned. No doubt this story would be in a business section.”
That is a very valuable suggestion. I am better at explaining the individual side of things to the MPs and others I contact, but not as effective speaking of some of the business concerns because that is not in my personal experience. I would like to be able to elaborate when they ask me more questions about this. Several MPs that I can think of are either lawyers, or have business interests. I want to show them more clearly how this could effect them, their businesses, practice, and other Canadians like them.
and @Ann#!,
thank you for sharing your example. I think that getting this shared with the various Law Societies will help elevate concern about the US extraterritorial demands on those Canadians deemed ‘USPs’ re FBAR (and FATCA-son-of-FBAR) in a way that might get their attention. There are no doubt many many other examples, large and small where if we were to attempt to comply with US laws on Canadian soil, we would be compromising our legal duty to our employer or clients.
No-one has explored what this means for government employees who have co/signatory powers on government accounts, or on behalf of government clients with assets managed/held by others who may face the same dilemma that you have – except theirs may be even clearer – being currently a dual, etc. And what if the client is a dual or another type of deemed USP? We do not want the banks inquiring about the potential USP status of trust clients in your scenario, or the government one. The Harper government may not have thought of this, or they don’t care. Provinces and other government bodies have remained silent about the effects of FATCA on their operations, but there are implications for them.
I am not endorsing the source of the link I am citing below, but only provide it because the description of how the US punishes the RESP demonstrates that the US does not care one whit about the wellbeing of the children or parents it claims as UStaxableUSPs – and thus the decisions about USstatus are forced on children or their parents much earlier than high school graduation.
http://www.taxsamaritan.com/tax-preparation/resp/ ‘Avoid Canadian RESP Accounts If You Are A US Taxpayer’
September 8, 2014
The children living in Canada or (any other non-US country with similar education grants and savings plans) are deemed to be full US taxpayers, but not deserving of any equivalent US benefit (the US has an equivalent of the RESP but that is not available or even useful to those living outside the US). Instead, the US continues to impose punitive US taxes, complex and expensive reporting and penalty regimes on the RESP.
The very same situation is about to arise re the RDSP – the US (ironically with Schumer’s backing) looks to be creating something similar ‘The Achieving a Better Life Experience Act (ABLE)’http://www.silive.com/news/index.ssf/2014/09/schumer_backs_bill_for_tax-fre.html http://america.aljazeera.com/articles/2014/9/9/why-are-so-many-peoplewithdisabilitiesforcedtoliveinpoverty.html , but again, it will be of no use to those living outside the US. Our children or dependents with disabilities who need the RDSP, and the government disability grants/benefits provided by the country where they actually live face punitive US taxes, reporting and penalties on the savings and income they need to survive.
Think of how many Canadians with the US burden might need the RDSP and disability benefits. This includes some of those this Government of Canada report describes:
‘Mapping Connections: An understanding of neurological conditions in Canada
The National Population Health Study of Neurological Conditions’
http://www.phac-aspc.gc.ca/publicat/cd-mc/mc-ec/index-eng.php
Yet, the Government of Canada has done NOTHING to get the RDSP the equivalent tax treatment that the RRSP has in the existing Canada US tax treaty (even with the mandatory annual reporting and form 8891).
The numbers of Canadians who may need the RDSP and RESP yet are disabled from benefit here in Canada because of the criminal negligence of the Harper government who allows the US to suck out the savings and benefits of the most vulnerable – children, and those with signficant disabilities is unconscionable.
We need to hammer our MPs on this one, and any candidates running for federal election.
The Liberals have yet to respond as a party, and their leader continues his silence on FATCA in Canada. Silence can imply consent. As a party are the Liberals consenting to the US taxing Canadian children and Canadians with disabilities? So far I think the answer is yes, because despite the efforts of individual Liberal MPs, Justin Trudeau remains mum. He hasn’t even promised to change the Canada US tax treaty to get our registered accts exempted from US taxation and reporting. That doesn’t even involve a statement about FATCA. Yet we hear nothing from him.
IBS readers outside Canada may have equivalent savings and benefit plans that their non-US government provides, but that the US disables their children and dependents from being able to benefit from. For example, EU residents could explore this in case any EU law would prevent the US from burdening the vulnerable in these instances – which would be discriminatory.
@Badger, you are correct that the Liberal leader and the party have no policy but silence. Maybe they haven’t formulated on for public consumption or maybe they plan to simply go along with what the Cons have done.
However, Trudeau has stated publicly in response to the new Immigration Act that Canada should not be creating rules that create a tiered form of Canadianship. That there should not be a second – class Canadian.
Different topic perhaps but one we can run with in pressing the Liberals on FATCA IGA, which does create another kind of second class citizenship for those of American ancestry no less than the new Immigration Act’s clause allowing the revoking of the citizenship of duals does.
@USCitizenAbroad
“Now that your lawyer employer has been advised of your possible “USness” and that your “possible USness” (or that the U.S. might possibly consider you to be a “U.S. person”), your employer has an obligation to remove your signing authority from the law firm trust accounts.”
I strongly disagree.
For one thing, the lawyer employer has an obligation to behave ethically in dealings not only with clients but also with employees. Treating an employee differently based on national origin would be a violation of the Charter.
For a second thing, there is in fact no “possible USness”. @Ann’s situation is especially clear cut as compared with that of others on here: she relinquished many years ago.
Thirdly, this is a US law. No lawyer in Canada should be allowing US law to affect their decisions. What happens if next year the US passes a law stating that if any Canadian or foreign law has any CLIENTS who are US persons, then complete data on the files of ALL clients must be turned over to the FBI? At what point is Canada going to say no?
I would have preferred that the buck had stopped with Ann and that she didn’t even drag her employer into this–because I don’t think her employer really needed to know anything about her beyond the fact that she is a Canadian citizen. But given that she did, I’m not going to let her employer off the hook when it comes to taking a strong stand.
@YogaGirl,
Thank you for noting that about the tiers of citizenship comment. I will look for it in order to cite it to them.
@Dash1729
“Treating an employee differently based on national origin would be a violation of the Charter.”
Ann’s employer would most certainly claim to be treating her differently on account of her inability to maintain the confidentiality of client information. The fact that that this problem exists because she’s ‘American’ doesn’t imply that his discrimination is based on ethnic origin.
Very few rights are absolute; most are subject to ‘infringement’ in various circumstances. One situation where most rights can be derogated is where legislation permits it to be; e.g. The right to privacy is suspended in the case of a search warrant. Of course, such derogation must be consistent with a constitution or charter.
I’m not certain of the following, so please someone correct me if I’m wrong, but a constitution or charter is binding on a government, not so much its citizens or corporations. A constitutional right to privacy means that the government must uphold its citizen’s privacy and may only create legislation consistent with such rights. The government must then create legislation (PIPEDA) if it wishes to confer those obligations on its subjects. So a government may not practice any form of racism, while corporations are likely subject to employment equality and similar legislation; but individuals are pretty much free to practice most forms of discrimination.
For the record, I’m no flag waving supporter of US tax policy at all. If I choose to engage someone’s legal opinion it’s an effort to shine light on that particular issue. Of course so many here are incensed by US policy that most every such legal opinion is anti-US. Invariably therefore, I find myself proposing opinions that might appear pro-US. This is not the case; I’m on your side.
@Domino
“Ann’s employer would most certainly claim to be treating her differently on account of her inability to maintain the confidentiality of client information.”
No such inability exists. She is quite capable of choosing to do the right thing: abide by Canadian law and ignore US law.
Now if she were to inform her employer of a choice to do the exact opposite–to abide by US law and ignore Canadian law–then her employer would, I’d agree, have to adjust her job duties so she isn’t given that opportunity. Although I believe Ann has unnecessarily involved her employer in this, she has stopped short–at least in her comments here and at Forbes.com–of saying she has any intention of giving her employer’s data to the USG. She has merely stated what she would have to do to file an FBAR. She has not stated that she is actually planning to file an FBAR–at least not on here.
Of course if the USG refuses to accept her relinquishment from decades–which I feel is very clear cut–it might become hard to travel to the USA. If her job also requires travel to the USA, that WOULD be something she’d have to discuss with her employer.
But to close with my main point: there is absolutely nothing except a US law which Ann is completely free to ignore preventing her from respecting client confidentiality.
@Domino
“I’m not certain of the following, so please someone correct me if I’m wrong, but a constitution or charter is binding on a government, not so much its citizens or corporations.”
I’m not a lawyer but I agree we need to look at to exactly to whom a constitutional obligation is binding on. However, look at the following website:
http://www.cdpdj.qc.ca/en/droits-de-la-personne/motifs/Pages/origine.aspx
This website isn’t written in legalese and appears to be directed to ordinary people–but it clearly refers to the Charter and clearly refers to private sector employment–as opposed to just transactions involving government. It does appear that these matters are generally handled at the provincial level–the above is a Quebec website–except where banks or the federal government is involved. But I would be very surprised if there is any Canadian province or territory where such behavior is legal–though it does seem to depend partly on provincial equivalents and not solely the federal Charter.
Of course all this assumes that, at tne end of the day, Ann isn’t actually going to fill in an FBAR with her employer’s details.
“This is not the case; I’m on your side.”
Good to hear!
Not filing. Period.