UPDATED
The video links are hopefully fixed. I neglected to acknowledge that the transcripts were made by pacifica and calgary411. Any emphases are mine.

@Carolyn_Bennett #FATCA Forum TORONTOSat Dec15-UofT-MakeYourVoiceHeardToGovOfCAN: STOP US INVASION of CDN SOVEREIGNTY http://t.co/z4OYSznD

— Patricia Moon (@nobledreamer16) December 12, 2012

I had intended to write something for Brock’s 4th birthday (December 10) but when I got up and looked at the calendar I noticed I had missed it. But then I realized, today was the 15th and that the FATCA Forum was exactly 3 years ago today. I actually feel as if it were 10 years ago, probably because so much has happened since then and it has been so intense.

Brock was certainly the start of our section of the expat movement. Absolutely no doubt about it. But the FATCA Forum was the beginning of something else equally important – Brockers coming together and becoming active in other ways. I definitely think without the Forum, things would not have taken shape in the way they have.

Likely a lot of you have never seen the videos/read the transcripts of that day. Some people seemed to think that since there weren’t hundreds of people there, it wasn’t effective. But they couldn’t have been more wrong.

Technically, if I remember (and someone please correct me if they know otherwise), the meeting was sponsored by the Progressive Canadian Party, headed by the Hon. Sinclair Stevens. I remember being quite impressed by him; such a gentleman but no-nonsense about the shenanigans that had taken place when the Conservative Party voted to dissolve the party and merge with the Canadian Alliance to form the modern-day Conservative Party of Canada. I had absolutely no idea what he was talking about. But then he started to talk about the Charter. Up to that point, I don’t recall focusing on the idea that Canada would be/could be involved in helping us out of the miserable situation we all found ourselves in which at that point was mostly about FBAR and renunciation. When he said the Charter didn’t apply just to citizens, it included permanent residents, visitors, in fact anyone who happened to be in Canada, he planted the seed for the CDN lawsuit (at least in my mind).
 

…. in the sense that I think it’s very appropriate today. Canada needs representation at the national level.
And what you are considering today – and I’m looking forward to some of the experts that are here to discuss it is the fact that a foreign nation is attempting to levy taxes against people who are still technically citizens of the United States – and there are over a million of them in Canada – and we say that’s just wrong. It’s just inherently wrong not to acknowledge the sovereignty in this case of Canada.

And to that extent there will be three headings that you will be told about today. But the heading that I’m most interested in is the Canadian Charter of Rights and Freedoms. I was in Parliament when that was passed in 1982. I remember the debate. I remember the significance that was felt, not only in Parliament but throughout the country, that we were getting our own Charter, a Charter that would identify what is uniquely the Canadian rights and freedoms.

Now, the reason it’s relevant to today, as I’ve indicated what we’re living with is this threat from the United States, who wish to become extra-territorial in the sense of tax collection – I think it’s interesting to bear in mind some of the wording of the Charter of Rights and Freedoms.

In order that there is no doubt that a permanent resident of Canada has a say and it must be protected, I would refer you to s. 6 of the text of the Canadian Charter of Rights and Freedoms. It says:

“Every citizen of Canada and every person who has the status of a permanent resident of Canada has the right” and that section deals with certain things.

But the most significant section of the Charter is s. 15(1) – and put yourself in the context when I say “individual,” put yourself in the context of a US citizen, according to the Americans, being referred to. That section says:

“Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and in particular without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.”

That catches the so-called US citizen. Certainly if he’s been here longer than six months, he’s a permanent resident. And this Charter and coming out of today, if you agree, we will be making a representation first to Finance in Ottawa, who have requested comments on this subject. We will be making a representation among other things pointing to the need to obey the Charter of Rights that is thirty years old in Canada.

I thank you for coming. I hope to hear your input as we go ahead. But by all means, you are doing a great service for Canada and the citizens and permanent residents of Canada.

Thank you very much.

 
John Richardson was one of the first people to make us aware of the fact that FATCA et al, was NOT about taxes. People often miss his point when he says “You don’t have a TAX problem, you have a COMPLIANCE problem. They haven’t filed their taxes, how is it they don’t have a tax problem? They don’t understand what he means when he says it’s a myth that Americans abroad won’t owe any taxes. Of course what he means is that once you have dealt with the compliance problem by filing, THEN you will begin to have tax problems. He was the first person I can remember who made us understand that it wasn’t about owing income tax; of course, many do not due to the FEIE, FTC etc. I believe nobody understands better than he, where we WILL owe:

• when we sell our homes
• when we invest in tax-deferred savings accounts that the US will not recognize
• when we invest in non-US mutual funds
• when we file a US tax return as MFS (incurring AMT & Obamacare tax)

Understanding tax is not the point, it is understanding how it affects peoples’ lives. And one of the reasons he gets this better than anyone else could not possibly be demonstrated better than the following explanation:
 

 

Now the US is a country that really doesn’t like anything that they call ‘foreign’. In fact, if you were actually to look at the Internal Revenue Code in theUS, you would see that the word ‘foreign’ wherever the word ‘foreign’ is, the word ‘penalty’ is sure to follow. Now what this means is that a number of day-to-day activities that people in Canada and other countries engage in, which by the way are heavily promoted by government policy, things as unimportant in life as retirement planning for example, are in fact subject to US tax laws and are taxed in very, are not recognized, as tax-saving vehicles. Now I’m going to give you one example. I could give you more but I just want to give you one example to demonstrate the point. As you know, the Government of Canada in 2009 introduced something called a TFSA, Tax-Free Savings Account. How many have heard of that? And, it is, I think this is very important to understand that this is part of what is considered to be desirable domestic Canadian policy to assist and encourage people to save for retirement. Agreed?

Well, let me tell you what that is from the point of the United States Government. First of all, it is not recognized as anything, but remember that US Persons are required to file tax returns accordingly to exactly the same laws that people in the United States are and because there are no TF(S)A’s in the US, therefore there are no TFSA’s anywhere in the world, but under US law for example, these are considered to be a ‘foreign trust’. Now, so what you ask? Well, in theUStax system on the one hand there’s the issue of how much tax is owing. But, there’s another dimension to it, which is used which I think also, I suspect, to raise revenue and this has to do with the filing of information returns.

OK? So, in other words, it’s OK to have a foreign trust, but what’s not OK is to not report it to the IRS. Well, you might think, OK, so what, so let’s, we’ll call them up and drop them a line. Not so simple. Very complicated reporting requirements, very complicated forms. For those of you who areUStax geeks, you might recognize the Form 3520 for those who have been thinking about this. You say so what, give me the form, I’ll fill it out. You will not be able to fill out this form without professional help, totalling thousands of dollars, if you can even find that kind of professional help in this country. And, the penalty for non-willful, $10,000. How many think that’s absolutely outrageous? You do? Well, you’re not going to believe what I’m about to tell you next then. Because, it’s a foreign trust and the one thing theUStax system is based on a system of complete distrust, they want verification from what is called the Trustee. Now in people talk that means if you have a TFSA at, say, the Toronto Dominion Bank, the Toronto Dominion Bank would be the Trustee and the Trustee, under US (imagine this, OK), under US law, the Trustee, the TD Bank, is required to file with the IRS a form which essentially duplicates your form to essentially just validate that in fact you’re telling them the truth. You think the TD Bank is going to do that; how many imagine they’re going to do that? No, they’re not.

Well, the problem is this. Two problems. The first is, your tax return if you’re living in the USis due April 15th. For people outside the US, it’s June 15th and you can get an extension until October (OK, if you don’t owe them any money. We’ll get to that – I see you’ve had some problems here – I’ll be interested in hearing later.). If this form is not filed by March 15th, which by the way is well before the due date of your tax return, then you, not the TD Bank, you are subject to another $10,000 penalty. OK? Now, I’m going to just continue the discussion of the forms and the penalties in a specific way, but what you need to understand, and for the purpose of this whole discussion today, is that when we’re dealing with theUS tax system, we have taxes, which you understand. I mean there’s nobody inCanada who could not understand taxes. How many think they are high? Oh, you don’t? OK, but what you don’t understand and what’s left out of this discussion is the information returns which are actually the bigger problem, a) because nobody knows about them and b) because I guarantee you, and I’m going to stand by this word (I would rarely use the word, guarantee) that nobody except a person who does not own anything except the shirt on their back could afford to file a US tax return for under about $3,000, and I don’t care who you are. If you have anything, OK, if you have anything, it’s going to be much more and I know somebody personally who filed aUS tax return in 2011 that was almost 200 pages of information returns. Very middle class person as far as I can see unless there’s some stash that he hasn’t told me about, in which case I don’t think he’d be telling to the US government either. But my point is that we are dealing with a tax system of enormous complexity. I’ve heard it referred to when it’s applied to US Persons abroad as simply nothing more than a tax and penalty club.

Abby Deshman’s presentation was such an eye-opener. This section focuses on how the protection of rights is unequal in different countries and how we will see an erosion of ours with exchanges to the United States.
 

And, even that is so concerning and here’s why. We’re seeing all kinds of areas where there is enormous information sharing going on between Canada and other countries. And we know, from past instances, that when information is shared across borders, it loses all kinds of protection. So obviously the most, the gold star example of how bad things can get is Maher Arar. Right? That was directly a consequence of Canada, Canadian officials, improperly without the right caveats, sharing information with the US which then led directly to his extradition and torture. So this is what information sharing can do. It’s not the same class of information sharing, so some people have said ‘well yes, those are national security secrets. You actually think that sharing the banking information is going to lead to torture’, you know.

What is the actual privacy implication in sharing this information? Maybe your name, maybe an address you had in the US, maybe your bank account information but we know, and it’s largely from whistle blowers in the United States, that the United States is extremely interested in collecting information from all kinds of sources. They have enormous information databases; they have enormous surveillance programs; they have warrantless access to all kinds of communication coming from inside and outside the US and it’s not because each of these emails, each of these small pieces of information is incredibly important to them. It’s because when you collect all the data, when you collect who you’re talking to, when you’re talking to, what bank accounts you have, how long did you spend in the US last year, how long did you spend in other countries, where did you go to school, where were you born. When you collate all that information, it allows for an analysis and it allows for analysis by security agents; it allows for analysis by government agents and it’s this meta data that allows people to build these profiles about millions of individuals.

This is what is happening in the United States right now. It’s not happening in Canada, yet, but if you pay attention to the dialogue over internet access, lawful access, Bill C-30, accessing our personal information, trying to figure out who we’re communicating with while trying to keep track of all this information. Is the Canadian government interested in all these kinds of databases and these kinds of profiles? Absolutely. And if the US is going to do it for us, why do we need to have strong laws in Canada? Right? If theUS is going to intercept all of our communications, the Canadian government doesn’t need to have warrantless access. They can just ask for that information from the US. And if we have increased information sharing, that gets much easier. So, all of these international information sharing, little bits and pieces here and there are extremely concerning. And, the fundamental question for us, always, whenever we hear that a company, the government wants to collect, retain and disclose personal information, is ‘why?’. Why do you want to do this? You know, there can be perfectly legitimate reasons for people to collect, retain and disclose personal information. There can be really important reasons to do that.

But, the truth is for this particular part of it, there is no good reason. And, I take the Canadian government’s own statements on how many tax evaders there are in Canada. We are not a tax haven, right? This is not a rational policy based on a real problem that we need to solve in government. And maybe, you know, giving up some of our privacy is a reasonable thing to do? No, no, no. That’s not what this is about, right? There is no reason that the US government needs all this information on Canadians and there is absolutely no reason that the Canadian government should acquiesce and give all of this information over. So, I think there are enormous privacy concerns and we do have privacy legislation that would protect us. One of the requirements of the regulations themselves that anyone who is asked for this information sign a consent form so that they waive their privacy rights. Usually privacy is based on consent so you can consent to disclose your personal information. We’ve seen this in other contexts, though if you actually look at whether that is voluntary informed consent, I do not think so. Try living without a bank account. You’re not going to be able to do it, right? So, there’s going to be, if this goes forward, legal battles about the meaning of consent, about is this really necessary, about the very specific minute details. And, there’s a couple of various ways that you could think about this, but in the abstract it’s extremely hard to engage in those details in this analysis because this is a moving target.

 
For myself, one of the most important things I learned that day was from Allison Christians. Tax treaty override. I still think that this was totally ignored as a relevant matter in the summary trial. The IGA exists only because the DTA/Tax Treaty DOES NOT authorize the waiving of rights that is required by FATCA. I am not talking about privacy here. It is not about what information exchange the Tax Treaty authorizes nor is this about whether the Tax Treaty will allow Canada to aid the US in collection. ***Actually, after I wrote this I realized the PFFIs never ended up signing because of the switch to the CRA to avoid the privacy laws. However, that does NOTchange the fact that the IGA cannot be seen as valid because it is rooted in the Treaty. It still remains that if that were so, there would be no need for an IGA. That’s just backwards.The US CLEARLY UNDERSTOOD THAT THE TREATY WOULD NOT COVER FATCA. If they understood it, which I believe Allison clearly demonstrates in this video, then we need to work harder to get our lawyers, the government lawyers and the next judge to get this.
 

 

First, we should be talking very loudly and very strongly in strong terms about the tax treaty override. Right. So the last time US overrode the US-Canada Tax Treaty, was when the US adopted the Branch Profits Tax in 1986. Now, if I’ve just lost you all because you have no idea of what that is and don’t really care, that’s fine, but here’s what I’m going to tell you – the outrage over that Tax Treaty override was such that it actually led to kind of some concessions being dragged out of the US on the part of Canada when they re-did the Treaty to make it not be overridden anymore. In other words, here’s the thing. Many US law seminar, a treaty in the US is equal to the law. Law of the Constitution, law in the books, legislation, case law : equal, which means later in time rule, whichever one is most recent, that’s the law. Right? Just like a common law kind of precedent kind of thing. OK. So US signs a treaty with Canada and says we’re going to impose this level of kind of tax. We’re not going to impose tax on capital gains Canadian residents earned in the US. We’re not going to tax dividends of higher than 15%. We’re not going to tax interest of less than 10%, 5%, whatever it is. Then if the US decides to put a new law on top and says no we’re going to change all that with the legislation – that legislation now applies instead of the Treaty. Last in time, so in other words, the US (and again one of the few that can do this) can unilaterally override a Treaty. They don’t have to terminate the Treaty; they just write a new law that negates it. They did with the Branch Profits Tax in 1986.

They’re doing it with FATCA. There’s not any question in my mind. And, the reason again, see it in the statute because in the statute the PFFI (they ask you to waive your rights) but they have to waive a right too. Guess which right they have to waive under the statute if they’re going to sign this agreement? Any, ANY rights under any US Treaty with Canada. Right. That means NAFTA, the Double Tax Treaty and if they ever get the thing signed, FFTA, Foreign Free Trade Act of the Americas. They’ll never sign that thing, you know that. It gives investor state arbitration, yeah, a door into pressure on the US. So, forget it. It’s not going to get signed. Watch, tomorrow they’ll sign the thing. But anyway, it doesn’t matter. The point is you, the PFFI, under the PFFI agreement, you waive any right under any US Treaty. I’m telling you; I looked at that twice. Really? It doesn’t just say the Double Tax Treaty? No, any Treaty. So, you can’t come back and say this treatment between US and foreign…, you can’t come back and say this looks like a subsidy to US financial institutions. And don’t think that they don’t see it. They’re advertising to you to move all your accounts to the States to save yourselves from FATCA. Yeah. This is going on now – that is you have American trusts, account managers, mutual funds and advisors. If they haven’t woken up, they’ll tell you to take the money out of your RSP’s, whatever is here, and put it in the US. If you’re an American abroad, don’t have mutual funds in Canada, you can’t own those here. You’ve got to own those in the States.

Yeah. So, don’t think that we don’t already see that so… But what you’re saying as the financial institution, you’re absolutely waiving your right to raise any kind of subsidy claim under the WTO, any kind of NAFTA, any kind of tax treaty challenge. You don’t have it any more once you sign that PFFI. So I think we can be talking very loudly about Tax Treaty override. That requirement to waive any rights under any US treaty is in 1471.C.3.c. I wrote that one down. And the IRS claims there is no override because again they’re saying it’s voluntary.

But the thing is there’s no Treaty override, then why do you need a country to country IGA? You wouldn’t need it if there wasn’t a Treaty override. You just wouldn’t. The competent authorities could just do what they are asking you to do. So, I think we’re being sold a little bit of a bill of goods here and that there’s sort of protest. ‘Oh, there’s no Treaty override, there’s no Treaty override.’ Don’t believe it. You heard it from me. There’s a Treaty override because if there wasn’t, they wouldn’t write that into the statute, preventing you from bringing up any Treaty and they wouldn’t write into the IGA the recognition that they’ve got to do this. Right? OK. So, I think it’s there. I think it has being admitted through the precautions that have been made in the drafting …. I find it fascinating. In fact, I’ve been sort of writing back and forth with one of my long-time blog readers, one of your folks, saying I wish I could have been in the room when they made, wrote that clause ‘under any US Treaty’ – what were they thinking to themselves? What were they saying? Why do we need that? Somebody verbalized the need to waive rights under all Treaties. So get this, that’s not minor. I think. OK.

 
Jim Jatras was one of our earliest friends and is probably most famous for this statement “FATCA, the worst law you’ve never heard of.” In retrospect, part of what he said that day did not get the attention it should have. And perhaps there is something in it for the future:
 

And meanwhile, what they want to do is get that sewed up before any kind of serious repeal measure can get any ground in the United States. That’s why Canada is so crucial.

If Canada rushes this process through and signs an IGA with the United States, it will be very damaging. Frankly, it will be small comfort if we say, “Yeah, but they might be able to defeat it in Parliament later.”

Frankly, I don’t know how great the odds of that are. You know, where are the New Democrats? Where are the Liberals? Where the PQ? Where are our, you know, more Libertarian-minded members of the Conservative Party? Where is the damn media in this country? Why is the media acting like bulletin boards for government statements, which is just as bad as what we do in the United States?

It’s part of the problem here is that, you know, we’re all individuals who are basically talking to each other, but we’re getting frozen out by the system of what constitutes a real issue. And I don’t know if anybody has a good answer for this. Because I know that not only my own messages, but many of the people in this room, sent things to people in the media and said, “Look, Canada’s sovereignty, billions and billions of dollars of Canadian wealth are at stake here and you guys are not covering the story.” What’s going on?

If the Canadian government said: “(a) no IGA; (b) we will not allow FATCA to be enforced in the Canada because it’s an American law not a Canadian law; (c) we will not allow Canadian FFIs to comply with FATCA because it would violate Canadian laws; and, (d) fourthly, if you do it, if you try to enforce this American law against our institutions, hit them with 30 percent withholding, we will hit you with a whole raft of remedies, including domestic lawsuits in the United States from aggrieved Canadian institutions as well as from the Canadian government, trade actions, and anything else we can think of to retaliate,” I can guarantee they will not pull that trigger.

 
And then we had our dear Petros. I did not get to hear Petros that day because Allison needed to get to the airport. I have listened many times to this and think the only thing to do, is listen to the whole thing. This was the human side of the picture that day.
 

 

This is out of order but I think this is the best way to summarize what some of us walked away with that day and that we are still carrying it out today.
 

 
 
**********
 
Other posts about the Forum (short reports)
 
Fatca Forum Part I
Fatca Forum Part II
Fatca Forum Part III
Fact Finding Forum on FATCA
A Fact Finding Forum on US Tax Grab in Canada Official Press Release
 

Videos

Posts about each portion of the Forum

Mr. Stevens

Mr. Richardson

Ms. Deshman

Mr. Richardson

Ms. Christians

Mr. Jatras

Mr. Dunn
 
Full transcripts:

Mr. Stevens

Mr. Richardson

Ms. Deshman

Mr. Richardson

Ms. Christians

Mr. Jatras

Mr. Dunn