Originally, my understanding was that existing customers would not be signaled under FATCA regulations unless their accounts were over $50,000. Yesterday, I spoke with a woman whose accounts never exceed $10,000 in aggregate. Furthermore, she is a young mother who hasn’t worked much in the last few years since coming to Canada, and so she has never had an IRS tax liability, as her income would be well below the Foreign Earned Income Exemption. She holds her accounts jointly with her Canadian-only husband. This case highlights why we need the legal action of ADSC.
Yesterday she received the following correspondence from her bank. It shows that they have determined that she has US indicia. They have threatened her with reporting her accounts to the CRA in violation of section 8 of the Canadian Charter of Rights, which would require the CRA to obtain a warrant before seizing her account information. But now the TD Bank has threatened to transfer her account information to the CRA. But what crime has she committed that the TD has threatened this action? None at all.
I have recommended that she do nothing–not fill out the self-certification form. But I’d like to hear what others think. Please discuss.
Here is the self-certification form. Please note the date at the bottom: June 9, 2014.
In fact, that DA report is the equivalent of an arsonist yelling, “fire, fire” while standing next to the building he just lit on fire.
@US_Foreign_Person – You say elderly US persons, were they born in the US?
Please remember the term ‘US Person’ doesn’t necessarily mean they were US born.
If they have a Canadian place of birth, at their stage of the game you may want to weigh up the odds whether the bank would ever catch on?
@Joe Blow – DA is a waste of time – just towing the party line. The ACA isn’t far behind. They’re a bunch of Americans living abroad with mostly dual citizenship that enduring the US Congress’ abuse in the hope Congress will change. Applying Milton Friedman’s logic on FATCA, unless it’s ‘politically profitable’ members of Congress won’t change it.
While I hold nothing against the ACA, they certainly have to adjust to the post-FATCA world and realise their mission has now changed in view of the disrespect Congress has of American ex-pats.
During the Scotland referendum, it was refreshing to hear Scottish expats described as assets that someday could be used as a means to better Scotland.
The US – let’s suck out an American expat’s last nickle before they order a pina colada on some foreign beach because we’re green with envy because Homelanders wrongly believe all American expats live a Hollywood lifestyle. Let’s do a reality check for Homelanders.
The opportunity to directly engage with James Bopp and Mike Lee needs to be seized upon. I hope expats in Europe make a good turn out.
It would be great if James Bopp can be persuaded to take on overturning Cook vs. Tait during his challenge against FATCA. The Republican National Committee has already agreed to support RBT, so adding the abolishment CBT to the legal challenge against FATCA and FBAR should be feasible.
The IGA contained the “MAY” language, but bill C-31, the enabling legislation, makes one change to the agreement. Annex I 2.B.3 is the paragraph that requires banks to report accounts with indicia and states that they MAY apply one of the exceptions. Bill C-31 replaces that paragraph with:
Paragraph B(4) is where they ask for a self-certification, a CLN or a reasonable explanation.
In other words the BANKS MUST CONTACT YOU before turning your financial information over.
It seems that most of the copies of the IGA that are floating around do not contain this revised paragraph but instead contain the original text, but that is not the version that is the law in Canada.
What is a ‘checking’ account?
Not all credit unions with local client bases are non-reporting. I contacted 10. Five are reporting, two are still figuring it out, and 3 are non-reporting: Achieva, Implicity and Maxa. All have on-line application forms, high-interest savings account rates, available across Canada, cheques on the savings account, and Ding-Free Acculink ATM cards. All have unlimited insurance via Manitoba’s credit union deposit insurance (CDIC is capped at $100K).
I’m sorry–you are right, the SCI-W8 itself does NOT refer to a place of birth. However the notice mentioned by @Petros in the main post in this thread does refer to place of birth. Moreover it requires the presentation of a CLN to remedy the US place of birth so it doesn’t leave a lot of ways to get around the problem of a US place of birth. But, yes, if someone filled in the SCI-W8 in isolation without having gotten the accompanying notice, the US place of birth would not need to be mentioned and presumably wouldn’t become an issue.
Does anyone know if an account closure would trigger reporting?
Yes, all accounts closed after Jan. 1, 2014 are to be reported as well.
@whitekat – am I missing something? A checking account is an American term for a chequeing account … a current account upon which the customer writes cheques. What am I missing ? I am feeling very slow this morning or is this a joke on the double (US) meaning of checking ? OK … back to bed … I clearly woke up too early today. LOL
@notamused – thanks but this is confusing. According to what I read only the accounts closed from July 1, 2014 onward need to be reported by the bank…
Perhaps the rules are different in Canada? In Germany, reporting on closed accounts is from January 1, 2014.
Taxes make the French angry.
Sorry for this stupid question but-” accounts closed will automatically be reported” does that only apply to accounts with us indicia or does that mean even accounts that have no indications of a connection to the U.S.?
@Just a Canadian. Wow thanks for spotting and posting that change to the original legislation in Bill C-31. I hadn’t spotted or heard about that; perhaps that was an amendment that finally got through (though I thought all the amendments had been voted down). I’d lobbied by email with all the opposition parties, and at one point also Flaherty (before C-31 was tabled), on this very issue (though I’d said the contact should have come from CRA rather than the FIs, arguing it would be easier to ensure consistency of contact and interpretation from one place instead of from hundreds or thousands of places).
That’s an important point, at least for those who have CLNs or other rebuttals against US indicia. It’s also important for those who might not be aware their FI have US indicia on file (especially if it’s based on a note of some hearsay off-the-cuff comment made informally in a meeting with a bank employee, which may or may not have been interpreted correctly).
FIs are required under law to contact you and give you an opportunity to refute the indicia, before they can forward account information to CRA. This point deserves more prominence than being buried under this growing thread of replies IMO. I don’t know whether you have authorship rights on this website; if you do, please post as a new thread. If you don’t, I do have authorship rights and will post, but I’ll wait to see whether you reply or one of the other authors has posted this before acting on my own.
My concern now would be that ALL FI employees responsible for handling FATCA reporting be aware of this requirement. I’d hope that CRA and/or CBA and the credit union association would publicize and make this clear to everyone, but having worked in the federal bureaucracy I am all too aware of how “little” things can slip through the cracks. Which is why I get nervous about the idea of having hundreds or thousands of people scattered all over the country interpreting this complex legislation, with no central oversight by people who are trained and charged with responsibility for that oversight. For all my concern about some aspects of CRA, I’d rather have them do this than all those FI branches out there …
Which is why I get a case of the willies when I read in TD’s cover letter that CRA WILL (not MAY) forward your account information, once TD forwards it to CRA. That’s nowhere good enough IMO. CRA needs to be a lot more than a post office box in this process.
The whole point of transferring the info to the CRA is to apply the provisions of the tax treaty, unless of course the banks are vetting it’s customers in strict compliance to the treaty, no?
@Bubblebustin That’s what should happen IMO. It’s for a designated arm of the Government of Canada (in this case, CRA) to apply the provisions of an intergovernmental agreement (let’s not call this a treaty, as it isn’t described that way in our legislation and there is a very serious US constitutional issue to refute it being a treaty from the US side since it wasn’t ratified by the US Senate).
It isn’t for the banks to say whether they’re in strict compliance with the legislation, no more than it’s for the banks to say whether they’re in strict compliance with the Banking Act or the Privacy Act. Ultimately that’s up, initially, to the responsible authorities in the Government of Canada, and failing that or in case of a dispute, it’s up to a federal court in Canada or other arbitration body if and where one is specified in the treaty (as is in fact the case in the US-Canada Tax Treaty but isn’t AFAIK in the case of the IGA and Bill C-31, unless you take literally the proviso at the beginning of the Agreement that it forms part of the Tax Treaty).
At least that would be my non-lawyer’s interpretation (but based on a couple of decades working at times with legal or quasi-legal files within the Government of Canada. But I may stand to be corrected.
Hence my extreme dislike of the notion that CRA is only a post office box in this process (which is what is implied by TD’s use of the word WILL in that context I’ve noted, though maybe that’s TD’s misinterpretation — I hope.
… sorry I moved a paragraph and forgot to delete it at the end, also dropped a couple of end-parentheses … maybe I didn’t have enough coffee this morning, or maybe too much …
Pingback: Your Canadian FI MUST Contact You Before Forwarding Account Info to CRA Under FATCA | Maple Sandbox
I’ve just started a thread at Maple Sandbox (where I have authoring rights) quoting Just a Canadian’s post and crediting him with it, along with an introductory comment and a cross-reference to this Brock thread. I’ve also authorized the Sandbox website to post a link to my Sandbox post on Twitter.
Sandbox link is here:http://isaacbrocksociety.ca/2014/09/19/is-td-bank-overzealously-ferreting-out-of-us-persons/comment-page-4/#comment-3077499
I leave it to others whether to do a parallel post on this website.
sorry wrong link I guess I didn’t clear the clipboard as I thought I did. The ping back link above is correct.
@Schubert1975 – For me if one government is telling another government to do something (except war) under a legal basis, there must be a treaty signed somewhere.
The US’ position is FATCA is legal under the existing US Canada Tax treaty under the information sharing clauses. However, when that treaty was signed information sharing was intended to be on a one by one case basis where the IRS goes to the CRA asking them for information on Mr X.
Canada mostly likely did not sign that treaty to help the US with automatic / mass data exchange.
So the US has effectively overridden the existing treaty and Harper stood blindly and let it happen.
The original US Canada Tax Treaty looks like it was signed in 1983 with some amendments since that time.
Interestingly enough Finance Canada list the IGA under its treaties section. So I guess the Canadian government considers the IGA a treaty.
Minor correction – in line with their own website and spin-doctoring – it’s The Harper Government considers the IGA a treaty (if that is in fact what they think; it’s hard to know what they think about anything, given their anal-retentive secrecy, obfuscation and sometimes outright lying).
The Harper Government isn’t the Government of Canada, though that latter currently (and I hope not for much longer) has a Prime Minister named Harper.
not nit-picking. Call a spade a shovel.
Also the IGA was never debated or passed in Parliament as an amendment to the treaty, whatever Finance Canada chooses to do on its website. But then we get into how many angels can dance on the head of a pin …
The only important issue is what is legal in Canada, and that won’t be settled until the ADCS court case has worked its way through the legal system, IMO anyway.