Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 9 Comments

cross-posted from citizenshipsolutions.ca
 
Please remember that the “dual citizen exemption” is available ONLY to those who meet the “five year tax compliance test”.
 
Introduction:

This is the 3rd of seven posts (all linked at the bottom of this post) analyzing the “dual citizen exemption” to the S. 877A Exit Tax which is found in S. 877A(g)(1)(B) of the Internal Revenue Code. Please remember that the “dual citizen exemption” is available ONLY to those who meet the “five year tax compliance test”.
 


 
I recently wrote a general post about the “dual citizen exemption to the S. 877A Exit Tax” rules. In order to qualify for the exemption, one must (among other requirements) have been BORN (at birth) a dual citizen (which is why this exemption could never be available to one who naturalized as a U.S. citizen).

The precise language includes:

became at birth a citizen of the United States and a citizen of another country

What does this mean for those who were born before 1947 and are claiming to have been born “dual Canadian U.S. citizens”? It’s not as simple as it sounds. I had not fully appreciated (or had not yet faced up to) the difficulties until I became aware of the tortured history and unintended consequences of the 1947 Canada Citizenship Act.

I recently had the privilege of meeting Don Chapman, author of the book “The Lost Canadians”. Mr. Chapman is clearly a “Canadian Citizenship Historian”. I encourage you to see the interview of Don Chapman here.

The first Canada Citizenship Act – Effective date January 1, 1947

Canada Citizenship Act 1947

The following tweet references a discussion at the Isaac Brock Society which suggests how Canada’s 1947 Citizenship Act could (in theory) impact the S. 877A Exit Tax rules:


 
This discussion at the Isaac Brock Society, provides the context for the following question which was posed to me:

After much searching I have not seen the following issue discussed on your blog or other sites. I recently received my Canadian citizenship certificate which has an effective date of 01/01/1947. I was born in the USA in 1943 to a US father and a Canadian mother (she was born in Vancouver, BC).
 
Prior to the passage of Canadian Bill C-24 in 2014 I was not considered a Canadian citizen, however passage of this Bill corrected this retroactive to 1947. However people born in Canada prior to 1947 that were dual citizens seemingly would have also incurred the same issue.

It is my desire to expatriate and I believe I can meet all of the requirements to qualify as a non-covered expatriate except as a citizen of another country at my birth, although a citizen by descent. This is simply because no one in Canada was considered a Canadian citizen until passage of the Canadian Citizenship Act of 1946 with an effective date of 01/01/1947. Thus, the same date on my citizenship certificate. Certainly this would not have been the intent of US Congress but doubtful anyone in Congress was ever aware that Canada considered its citizens to be non-citizens pre-1947. There must be many similar cases of older Canadians expatriating but who have not discovered them to date or their outcomes.

 

“If I was born before the first Canada Citizenship Act was enacted, could I have born a Canadian citizen?”

This post is an attempt to answer that question. The post is meant for “reflection and discussion”. It is NOT legal advice. The answer to this question could NOT be known with certainty unless and until it is ruled on by a court of competent jurisdiction (which the U.S. would assume to be a U.S. court).

In any event, I believe that the answer is:

Yes, if you were born prior to 1947, you can still have been born a “dual citizen” of both Canada and the USA.

In a general sense, I would argue the following:

Although the 1947 Canada Citizenship Act may have been the first comprehensive Canadian legislation to codify Canadian citizenship, this doesn’t mean that Canadian Citizenship did NOT exist prior to 1947.
 
Did Canadian Citizenship Exist Prior to January 1, 1947?

  • The Canada Citizenship Act of 1947 was Canada’s first citizenship Act.
  • Does that mean that Canadian citizenship did NOT exist prior to 1947?
  • Don Chapman of @LostCanadians says:

    “There WAS Canadian Citizenship before the 1947 Canada Citizenship Act”

  • This would mean that a person born prior to 1947 could be a “dual” Canada/US citizen (giving the opportunity to be exempt from the S. 877A Exit Tax).

 


 
In the written words of Canadian Citizenship “historian” – Don Chapman:

Canadian nationality and citizenship came into existence with the passing of the UK British North American Act 1867, in Canada the Constitution Act. The declaration would change no person’s status as a Canadian national or Canadian citizen as defined by current legislation.

The justification for such a declaration is fourfold:

(1) The 2013 decision of the Supreme Court in the case of Canada versus the Manitoba Métis; The decision declared Canadian law based on Canada’s claim by the Attorney-General before the Manitoba Court of Queen’s Bench that Métis and other inhabitants of Manitoba (except persons governed by
treaty) became full Canadian citizens on accession to Confederation in 1870.

(2) In 1921 Canada declared in general law the existence of Canadian nationality. The Act recognized the existence of Canadian citizenship for the purpose of general law. The authority to declare the existence of nationality and citizenship in the 1921 Act was derived from the implied powers of the Constitution Act.

(3) The authority to pass the 1947 Citizenship Act was derived from the implied powers of the Constitution Act.At the opening of Canada’s first Parliament, Governor-General Viscount Monck on behalf of Queen Victoria welcomed Canadians as a new nationality. The declaration in accordance with English common law declared by the Court of King’s Bench in 1608.
The case defined a nation as a territory within His Majesty’s domains that possesses its own Parliament and system of law. (Case of the Postnati. [1572] Eng.R. 64, (1572–1616) 7 Coke.Rep. 1a, 77 E.R. 377.
Also known as Calvin’s Case.)

(4) The Order in Council that proclaimed Canada’s Fourth Census (1901) defined Canadian nationality and citizenship in instructions to enumerators authorized by Sydney Fisher, Minister of Agriculture.

The proposed declaratory Act would declare that Canadian nationality and citizenship came into existence with the coming into force of the BNA Act, in Canada the Constitution Act.

If this reasoning is correct (and I do find it compelling), then the fact that one was born prior to January 1, 1947 is NOT a bar to claiming the “dual citizen exemption.” This would allow one to avoid the toxic designation of “covered expatriate”.

More reasons why, I believe that Canadian Citizenship existed prior to January 1, 1947 …

*****

1. What is the S. 877A(g)(1)(B) “dual citizen exemption”and why does it encourage those “born dual citizens” to not renounce U.S. citizenship?

2. The history of Canada’s citizenship laws: Did the 1947 Canada Citizenship Act affirm citizenship or “strip” citizenship and create @LostCanadians?

3. The S. 877A “dual citizen” exemption – I was born before the first ever Canada Citizenship Act? Could I have been “born a Canadian citizen”?

4. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act – Am I still a Canadian or did I lose Canadian citizenship? (The “Sins Of The Father”)

5. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act and the requirements to be “born Canadian”

6. The S. 877A “Dual Citizen” exemption: I was born a dual citizen! Am I still “taxed as a resident” of Canada?”

7. The S. 877A “Dual Citizen” exemption: “MUST certify tax compliance for the five years prior to relinquishment ”

9 thoughts on “The S. 877A “dual citizen” exemption – Born before 1947, Could I have been “born a Canadian citizen”?”

  2. @Duke: I sort of agree, but that’s the pleasure of reading stuff here, the philosophical and profound aspects of citizenship and taxation regulations. Trying to understand and reflect on these things has an appeasing effect on some of us.

    But when it comes down to practice, and declaring stuff to the IRS, I’m all for being hyper practical. It’s quite obvious that I would, in the situation at hand, not worry about this and conclude that yes, that person is a dual citizen at birth.

    That’s why I think trying to be fully compliant at all costs with professional help, may be in fact a voluntary descent into hell. When oftentimes (like 99% of the time) either ignoring FATCA entirely (if one has a foreign birthplace) or simply feeding simplified data to the IRS and FinCEN are the only sane way to continue living.

  3. @Fred, but now just imagine for a moment…what if none of us had the benefit of being able to bounce stuff around the room here at IBS?

    I( relinquished a decade ago and left the USA in peace with a great love to the American people.

    FATCA, IGAs and this witch hunt has had a detrimental impact on my physical health, the extent will remain unknown but I know it has taken away time on this earth. My GP was useless in all this and just did not and still does not get it.

    IBS stopped the damage and for that I am grateful to so many whom I hope to someday meet and shake their hands.

    As you said, its impossible to be compliant and correct.

    In the end I have learned all you can do is what is “right” for you and your family and your understanding of the lay of the land.

  4. A lawyer is not who made this complicated. It was a question posed on Brock which has now been included in an update. I can certainly understand how the person posing the question had concerns that the US might not see it as loosely as some might. So the natural thing to do is to go back, look at the statute which unfortunately, does not adequately address the issue.

  5. I moved to Canada in 1968 and naturalized as a Canadian in 1996. Changes to Canada’s Citizenship Act in 2009 made people like me with a Canadian born parent Canadian citizens at birth. I wonder how the US would view it.

  7. @Duke

    Could you give some background on this? Where would one find the information on the 1910 reference?

  8. Tricia
    https://archive.org/stream/actsofparl1910v01cana#page/206/mode/2up

    (f) Canadian citizen means-
    i a person born in Canada who has not become an alien;
    ii. a British subject who has Canadian domicile; or
    iii. a person naturalized under the laws of Canada who has not subsequently become an alien or lost Canadian domicile.

    ‘Has not become an alien’ meant ‘ has not left the country without the intention of returning.’

    That was then. There are pages and pages which make it clear Canada was encouraging immigrants who were Btitish and not otherwise undesirable. Fortunately things are different now. We encourage immigrants from anywhere and refugees from VietNam and Syria among many other strife torn countries.
    My point was that Canadian citizenship as a concept dates back to at least 1910 and probably before.
    Perhaps AF was only concerned with those born outside the country?

  9. Thanks Duke.

    Yes, I would think that is exactly why AF would have had concern since he was born outside the country. As listed above, he would be excluded from the list that defined Canadian citizens and even the 1947 designation would not give him such status at birth. Unless I am missing something???

    I am not familiar with the ins-and-outs of the 2009 law nor what is in C-24 that people have made reference to……hard to keep up with all this!

Leave a comment

Your email address will not be published.

%d bloggers like this: