Tim reports that yesterday’s budget document prepares Canadians for the implementation of the international Common Reporting Standard (CRS) in 2017. Note the section in bold. It’s too bad adopting the CRS doesn’t cancel the FATCA IGA! As it stands, the CRS is “common” to everybody except Americans! …. another case of discrimination against us adopted by the Canadian government. Thank you, Tim, for alerting us to this.
“Under the new standard, foreign tax authorities will provide information to the Canada Revenue Agency relating to financial accounts in their jurisdictions held by Canadian residents. The Canada Revenue Agency will, on a reciprocal basis, provide corresponding information to the foreign tax authorities on accounts in Canada held by residents of their jurisdictions. In order for the Canada Revenue Agency to obtain the information to be exchanged, the common reporting standard will require financial institutions in Canada to implement due diligence procedures to identify accounts held by non-residents and report certain information relating to these accounts to the Agency. It will not require reporting on accounts held by residents of Canada with foreign citizenship. The standard includes important safeguards to protect taxpayer confidentiality and ensure that the exchanged information is used only by tax authorities and only for tax purposes.
“Canada proposes to implement the common reporting standard starting on July 1, 2017, allowing a first exchange of information in 2018. As of the implementation date, financial institutions will be expected to have procedures in place to identify accounts held by residents of any country other than Canada and to report the required information to the Canada Revenue Agency. As the Canada Revenue Agency formalizes exchange arrangements with other jurisdictions, having been satisfied that each jurisdiction has appropriate capacity and safeguards in place, the information will begin to be exchanged on a reciprocal, bilateral basis. Draft legislative proposals will be released for comments in the coming months.”
Same deal in the UK. Before Parliament was dissolved a few weeks ago, the PM said ‘to fight tax evasion’ the Common Reporting Standard would be pass into UK law as well.
FATCA is simply the wild west for data reporting, and protection. The US doesn’t care who handles the data and the emphasis is always to report – hold nothing back.
The relationship between the US and rest of the world is changing right in front of our eyes. The US is going to be a regional superpower not global. China is taking charge of the old Silk Rd from China, to India and onto the Mid East.
Such blatant discrimination! Makes me so angry. Our conservative government clearly understands the need to protect the privacy of “Canadian residents”. Under CRS they assure us that our info will not be sent to foreign governments even if we hold another citizenship. Yet under FATCA, this concept is thrown out the window. Notice how they say “residents of Canada”, not “Canadian citizens resident in Canada”. This protection extends to all residents (as it should), and not just citizens of our country. If this is not a Charter violation, than I don’t know what is.
Marie: I agree! I hope that someone with Mr. Arvay’s ear will alert him to this new piece of ammunition.
I’m not Canadian, so explain this to me:
The report says: “foreign tax authorities will provide information to the Canada Revenue Agency relating to financial accounts in their jurisdictions held by Canadian residents.”
Then it says: “It will not require reporting on accounts held by residents of Canada with foreign citizenship.”
So it sounds like if Joe Smith, Canadian citizen, is a resident of Taiwan, then Taiwan must report his Taiwanese accounts to Canada. After all, he is a “Canadian resident” “in their jurisdiction”.
Whereas Jill Chan, Taiwanese resident of Canada, is not reported on to Taiwan.
Sounds suspiciously like FATCA-with-Canadian-characteristics to me. Even if it isn’t, it still sounds like a recipe for a mess.
Joe Oliver’s budget increases the maximum contribution to TFSAs, thereby increasing the benefit to individual taxpayers. Can someone run a calculation of how much potential “benefit” is denied to people like us for whom a TFSa is prohibited? My guess is that over the course of, say, 20 years, the cost of the denied benefit will add up to a fairly impressive number.
@Barbara
I believe it is saying that information flows one way regardless of citizenships, from the country where the financial account is held, to the country where the account holder is resident. For example a Canadian resident with a bank account in Italy will have their banking info sent from Italy to Canada because that is where they reside and pay taxes. That same person, regardless of their citizenship, will not have their Canadian banking info sent to Italy because they are resident in Canada.
Haydon Perry (on another thread) stated that Place of birth and citizenship are required datapoints for everyone. PoB goes down to city of birth. Nordea in Sweden jumped the gun and already started asking.
Apparently, someone born in Toronto has intrinsically different tax evasion characterstics than someone born in Vancouver.
@Barbara
” So it sounds like if Joe Smith, Canadian citizen, is a resident of Taiwan, then Taiwan must report his Taiwanese accounts to Canada. After all, he is a “Canadian resident” “in their jurisdiction”.
In your example, Joe Smith is a resident of Taiwan. Taiwan will not send his info to any other country. He is not resident in Canada, therefore Canada will send is banking into to Taiwan.
No name,
The Canadian government will not tell us any benefit denied to those of us who have TFSA’s or RESP’s to save for our children’s educations or RDSP’s that help with future costs for those with disabilities. For those who HOLD RDSP’s and RESP’s, at this point this is the way the US taxes (EVEN though our *foreign financial institutions* are exempt from sending information on Canadian registered accounts to the Canada Revenue Agency to be passed on to the IRS):
1. If the sponsor / Holder of an RDSP (or RESP for that matter) is a US person then (US person analysis of the beneficiary is irrelevant):
a. The income generated by the RDSP is taxed to the US person sponsor currently as it is earned
b. The grant is taxed to the US person sponsor when it is distributed to the beneficiary
c. US person sponsor must file 3520A annually
d. US person sponsor must file 3520 annually
2. If the sponsor / Holder of a RDSP (or RESP) is NOT a US person, AND the beneficiary is a US person then:
a. The income generated by the RDSP (RESP) is taxed to the US beneficiary currently as it is earned
b. The grant is taxed to the US person beneficiary when it is distributed
c. US person beneficiary must file 3520 annually (no 3520A)
Neither RDSPs nor RESPs are covered by the Canada / US Tax Treaty.
Note that a commenter said yesterday that there was a debate here at Isaac Brock Society whether or not there is a CLAIM to US citizenship for certain of our children. Yes, there is. But, although there is not the visibility of US citizenship for children born here, especially if not registered as births abroad, all should take into account in making their decisions, that the US disagrees — for some, with the specified facts of birth, the US DOS regulations say that US citizenship to some of our children is ACQUIRED rather than claimed as it should be if there is anything as citizenship taxation (or birth taxation) now that Canada and other countries have implemented FATCA law in Canada. .I decided, by not ever registering my son with the US, that my son is and always has been from the moment of his birth Canadian (though I did pay in my US taxes US$3,661 as I am the HOLDER of the RDSP for which he is the beneficiary.
The US still hasn’t committed to CRS. Nor does it have the ability to provide reciprocal information under FATCA.
“Does anyone know if the United States plans to sign on/ participate in the Common Reporting Standard or does CRS not apply to the U.S.?”:
https://www.linkedin.com/groups/Does-anyone-know-if-United-3731046.S.5940937373947817985?_mSplash=1
Calgary: “US DOS regulations say that US citizenship to some of our children is ACQUIRED rather than claimed”
My personal experience is that I had to document precisely to the US consulate that I had the requisite time of residence in the US in order for them to get a US passport. Sure, US citizenship may be acquired/claimed by children born abroad, but it seems to me that in order to get a document (passsport) proving citizenship, someone would have to document eligibility (perhaps not the right word). In the hypothetical situation where nobody “claims” US citizenship for a child, I cannot imagine the US making the effort of forcing citizenship upon them. After all, they would have to prove that the parent is eligible to pass on that citizenship. Which would mean documenting the lifeline of the parent(s). Not easy for the pre-internet years. Certainly not in my case, having left the US at age 13.
The Canadian Conservative government refers to us in Canada as *US citizens who happen to reside in Canada*. As US citizens we have US citizenship taxation, now the Canadian law by implementation of the IGA signed re FATCA: http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad. As far as I can see, according to the Canadian government and Bill C-31, our US citizenship still trumps our Canadian citizenship.
More confusion for those reading this with the *foreign citizenship* that happens to be US in Canada.
It was the experience of my daughter as well when she did the same (which she (and I) thought at the time was her CLAIM to US citizenship). According to DOS, Legal, my kids were US from the moment they took their first breath, born to me in Canada. She is now back in Canada and now with her own small (very small) business and, thank God, has successfully renounced.
Who knows — it should be a claim, but will *the law* be *the law*, or will *the law* change? My decision taking it all into account and fully realizing for our family’s own situation that I could just better ignore it all: I will not enter my son (who happens to have a developmental disability and not allowed to renounce his so-called *acquired* citizenship) into the abyss of compliance by doing the same to get a SSN for him.
It is all because I want the law to be common sense and not entrapping anyone (especially children in families like mine and families that have registered Canadian accounts) so none of our children will be caught up into this — not *US* unless they wish to make a CLAIM to US citizenship.
In my mind, *the law* should make sense and it, of course, regarding my children doesn’t make sense to me. Nor, for those born to Canadian (or other country parents) in the US but who returned to their own country as infants, young children, before age of majority). My hope is that the Senate Finance Committee will see the absurdity and injustice. If not, litigation.
There’s definitely a double standard there, Calgary411!
“It will not require reporting on accounts held by residents of Canada with foreign citizenship.”
Not only am I a resident of Canada with foreign citizenship, I’m also a Canadian citizen. It boggles the mind how they can create one set of rules for one group, and a completely different set of rules for another. But then again we all know the the Conservatives signed the IGA with a wink and a handshake, under threat of threat of sanctions. Whoever applied the term “collateral damage” to us really hit the nail on the head.
@Fred
It’s still a grey area that at the US could exploit if they want to. Notice that in the Obama budget proposal to provide relief to “accidental” Americans nothing was clarified about US citizens born abroad who haven’t taken the steps to claim US citizenship? It’s because the US considers them theirs to claim, IMO.
Pingback: The Isaac Brock Society | Global News “…the cost is not enough for them to not do it, because the relief they will get from having ceased to be a U.S. person is greater than the cost.”
“It’s still a grey area that at the US could exploit if they want to. Notice that in the Obama budget proposal to provide relief to “accidental” Americans nothing was clarified about US citizens born abroad who haven’t taken the steps to claim US citizenship? It’s because the US considers them theirs to claim, IMO”.
This part really pisses me off about the Obama budget proposal. They should not create categories for accidentals. I know there are many accidentals who did not apply for a passport of social security number as they flew under the radar. There are also many like me who got scolded at the border for not having a USA passport after the guard found out I was technically an American when he noticed my parent had their American passport and I had my Canadian passport. The fact that I did what I was told to do and followed the law because I feared the possible consequences should not in any way make people think I wanted American citizenship. As many have pointed out, I didn’t get my American citizenship when I applied for my passport (as instructed by border guard), I got it at birth. So it seems the Obama administration thinks I should be punished, and miss out on this proposed program because I followed the law. Those that knew they were technically American duals at birth, but successfully flew under the radar and ignored the law ( I don’t blame them for doing so ) will benefit. Doesn’t make any sense at all.
Letter to my M.P. John Weston
Good work, Duke. I’ll do something similar for my newbie Conservative MP who already knows I didn’t vote for him and that I won’t vote Conservative in the future. I’d like to poke some holes in the party indoctrination that I’m sure he is quickly succumbing to now that he is on the Hill.
@ All
You can go directly to the pertinent section with this URL.
http://www.budget.gc.ca/2015/docs/plan/anx5-1-eng.html#toc416529226
Phil, Many here understand your frustrations. Just because one had a passport doesn’t mean one was ‘claiming’ US citizenship. And even if they were, in my opinion that is a moot point if they had no idea that extra-territorial taxation was part of the deal!
Hind sight is 20-20, and no doubt many people such as yourself would never have applied for ‘proof of US citizenship’ or a US passport if they had known this made them US taxpayers.
However, the Obama proposal is a no go anyway, so what is the point ruminating about it further? Chances are that any future, ‘save the non-meaningfuls/accidentals’, should there be one, will be more encompassing anyway, and the passport you held won’t be an impediment for you.
Phil, one other thing I was thinking – you were born in Canada right?
In many ways you are MUCH luckier than those who were born in USA. You CAN avoid FATCA! If your banks already know your US status, find a new financial institution. NEVER MENTION WHERE YOUR PARENTS WERE BORN. They will never find out, and truth be told USA is not looking that far down the line, and doubtfully ever will.
The same thing with travelling to the USA – use your Canadian passport with Canadian birth place.
Phil, and another thought for what it’s worth – the only wrinkle I see you having is that I think I recall reading that you are already in the US tax system. You could just renounce since presumably you are up to date anyway, but honestly I think if I was in that situation, and 3000 was a lot of money to me (it is), I would just say ‘F – it’ and stop filing.
Yes Dreamer, I was born and raised in Canada. Yes I am up to date with filing. I it is so scary every year this time of the year worrying if I make any mistakes filing my USA taxes. It is so complicated and expensive. I don’t consider myself American and never wanted to be. Just got the documents and started filing because I was scared of what might happen if I didn’t. I have often wondered what would happen if I were to just stop filing. Do they have some software that lets them know if people randomly stop filing? Will it trigger an audit or something? Another question I have, if an American in Canada were to get audited, what info could the IRS get of that person? Would it just be what the person gives them voluntarily or would the CRA hand over all of our info? I honestly don’t, but if someone had an account that they have never reported, lets say at a non FATCA reporting credit union like Van City, could the IRS ever discover that during an audit or any other method? This is a hypothetical question, but I always wondered what the IRS could find out about someone if they audit you in another country like Canada. I am curious what people think.