WITNESS SEARCH UPDATE FOR CANADIAN FATCA IGA LAWSUIT:
WE STILL SEEK MORE CANADIAN WITNESSES:
Have you experienced marital stress or breakup, or medical or psychiatric illness because Canada turned you and your family over to a foreign country — or because you were afraid and entered into IRS compliance and suffered harm, or because you are in “hiding” and can’t afford to be IRS compliant or to renounce? Be a witness.
No single witness will be “perfect” from a litigation point of view. We will be seeking more witnesses (almost) right up to the time of submission of court documents. Your specific situation, that we cannot predict, might have unique characteristics that would be helpful in the lawsuit.
If you cannot be a witness, please tell a friend who you think might be interested.
— If you are interested in becoming a witness You will describe your harm in a written affidavit which will be made public and you can contact me at stephen.kish.chair@adcs-adsc.ca See our website at www.adcs-adsc-ca
FOR THOSE CANADIANS WHO ALREADY VOLUNTEERED: Unless you have already been informed by me or by our legal team that you will not be a witness, there is still the possibility — or (for some) likelihood — that you will be asked to be a witness. I’m sorry but I cannot estimate the time it will take for our legal team to get back to you with their decision. This is because they need to “mesh” the characteristics of all of the necessary witnesses and testimonies with the actual detailed submission that contains the entirety of their evidence, which are all still evolving. Please be patient in our getting back to you with a decision. Thank you for your help.
@Stephen,
further to the US and the Revenue Rule and assistance in collection:
from;
‘The U.S. as Tax Haven? Aiding Developing Countries by Revoking the Revenue Rule’
Samuel D. Brunson
Assistant Professor, Loyola University Chicago School of Law
Citation: 5 Colum. J. Tax L. 170
“…….footnote [238] Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital, U.S.-Fr., art. 28(5), Aug. 31, 1994, S. Treaty Doc. No. 103-32 (“The assistance provided for in this Article shall not be accorded with respect to citizens, companies, or other entities of the Contracting State to which application is made . . . .”); Convention for the avoidance of double taxation and the preservation of fiscal evasion with respect to taxes on income, U.S.-Den., art. 27(8)(a), Aug. 19, 1999, T.I.A.S. No. 13,056 (no assistance “where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State”); Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, with exchanges and notes, U.S.-Neth., art. 31(4), Dec. 18, 1992, 2291 U.N.T.S. 3 (“The assistance provided for in this Article shall not be accorded with respect to the citizen, corporations, or other entities of the State to which application is made . . . .”); Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, U.S.-Swed., art. 27(4), Sept. 1, 1994 (“The assistance provided for in this Article shall not be accorded with respect to the citizens, companies, or other entities of the State to which the application is made . . . .); Convention with respect to taxes on income and capital, U.S.-Can., art. XXVI A(8)(a), Sept. 26, 1980, T.I.A.S. 11,087 (no assistance “[w]here the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State.”)…
http://taxlawjournal.columbia.edu/article/the-u-s-as-tax-haven-aiding-developing-countries-by-revoking-the-revenue-rule/#_ftn239
The Banks seem to be “slow out of the gate” regarding US accounts. My employer has now received letter (2) regarding his trusts accounts. They banks seem to be all over the place on the issue. I know individuals opening new accounts @ RBC receiving letters and then others receiving nothing. The TD was the first bank to ask about my employer’s trust accounts. However, He has (7) different accounts at (6) banks because he conveys property. He only received the first later in the new year. I opened a tax free savings account recently. No questions. Go figure!
Need some help please. I have an account with a company called PI Financial in Vancouver. It is not a traditional walk in bank but a financial institution that manages money. I have one Tax Free Savings Account with them that I bought stock with from one Canadian company. Besides the initial deposit of money and the purchasing of stock from one company, there has been no transaction, gains, or interest on my account. It simply holds stock.
How do I handle this on my USA taxes? My accountant at H and R block says he needs to read my terms of conditions with PI Financial as he is unsure what forms I need to do for it. He mentioned something about possibly being a “foreign trust” and if it is he may need to send a form to two different offices in the states, ect, ect. It was alarming that he seemed unsure.
Any guidance on what additional forms I need to file on top of the 1040 for a financial account (Tax Free Savings Account) that holds stock from one Canadian company?
TFSAs. are not reportable to the CRA/IRS. Therefore, why bother? Don’t include your TFSA in any of your filing. P.S. H&R Block is not generally well regarded at this blog.
@Phil, Duke of Devon
You definitely have to submit paperwork for your TSFA, above and beyond the FBAR. (You also have to file an FBAR for each RRSP account you have, but those — unlike TSFAs — are recognized as tax-sheltered by the IRS.)
http://www.cbc.ca/news/business/taxes/tax-time-2016-us-citizens-tax-shelters-1.3446226
My accountants over the years have all advised me to stay clear of TSFAs, because they don’t offer any financial advantage (since they are considered taxable by the IRS) and require complicated paperwork (as they are considered a form of trust). I’ve also been told to avoid Canadian mutual funds, which also result in complex paperwork.
The bottom line is to not invest in anything until you’ve thoroughly researched the IRS tax implications.
@Phil
Your accountant doesn’t sound too knowledgeable about cross-border filing; in your shoes, I’d consider shopping around. As Duke of Devon mentioned, H&R Block might not be the best choice for your US taxes.
Phil. This discussion belongs on the expat taxes and FBAR thread. It depends on the size and importance to you of your TFSA. WestCoaster is correct in that TFSAs are not properly recognized by the IRS. They have no idea what to call them. The idea that they are some kind of trust raises all kinds of BS with form nation.
The Can gov’t negotiated exclusion of TFSAs from reporting by FIs to the CRA/IRS for a reason. Accountants will err on the side of caution which also raises the fee they can charge. I would err on the side of throwing caution to the wind and not mention them. Another choice is to disband it .
For a great deal of detail ,see- it’s as clear as mud but it covers the ground.
http://www.skltax.com/tfsa-us-tax-classification/
and
http://www.skltax.com/u-s-tax-implications-canadian-registered-plans/
I was advised to stay clear of TFSA until I renounced by my accountant. She said that the US has been about as clear as mud about how they should be reported. She too seemed to think that they needed to go on a 3520. My RESP got dubbed a foreign trust, too. Also as clear as mud. She said that some are just reporting them (TFSA and RESP) on the Fbar. It was my call. I decided to do the 3520 because I knew I was exiting. I didn’t not open a TFSA till I renounced. Interestingly enough, I was NOT asked about citizenship.
My email address in this post (above) is used, and is meant to be used, only for those who wish to volunteer as a witness. Today however I did receive this interesting email from someone in Cyprus who wants to do business with me:
“Offshore Asset Protection Package
Protecting your assets offshore can, in many cases, provide for much stronger asset protection than domestic business structures and trusts. Domestic asset protection vehicles are more readily accessible to seizure through US or local court rulings and judgements. Many offshore asset protection jurisdictions do not recognize foreign judgements. Therefore, a judgement creditor would face a substantial hurdle to attempt to pursue your assets in the jurisdiction where your assets are held. Strong offshore asset protection jurisdictions create a formidable challenge to those pursuing your hard-earned wealth.
One of the pillars of protecting assets from judgements is the offshore asset protection trust. Even if a monetary judgment is rendered against you, your assets can be safe and sound using the powerful international asset protection trust laws in the Cook Islands or Belize for example. A judge can rule against you, giving your enemy-at-law a license to pursue your assets. However a foreign trustee is not subject to your countries court rulings and therefore is not required to release your assets to the judgment creditor.
You control the day-to-day activities of your financial accounts within your offshore company and trust. Then, when legal duress arises, such as a lawsuit or judgement, asset protection trust provisions allow the licensed, bonded trustee to step in and provide a legal wall between your creditors and your assets. The highly-respected foreign trustee steps in and follows your recommendations on asset management while, at the same time, keeping your wealth safely shielded from legal attack. The trustee only needs to step in when the courts would take your money. So would you rather have a 100% chance of your money being seized by the courts? Or would you rather have a regulated, licensed and insured trustee step in and do what you have paid him to do: protect your money?
While the offshore trust, especially the Cook Island Trust, has a longer history, the modern Panama Foundation costs less to set up and maintain. The Panama Foundation is the most efficient advanced asset protection structure available. With a Panama Foundation, you can appoint anyone you like to handle your estate should you become incapacitated. Also, unlike a Belize trust, you can be the manager of the Foundation, controlling its investments for the benefits of your heirs.
Genshape Management Limited
Email: info@offshoreinc365.eu
Tel: 00357 2575 1831
Web: http://www.offshoreinc365.eu
Address: 17 Arch Makarios street, 2nd Floor Limassol, Cyprus”
No end to the people who want to solve *our problems*, Stephen. We at this site and others seem to be targets for exploitation one way or t’other.
I couldn’t find any link for my questions as suggested so I would like to ask one last question.
As mentioned, I opened a TFSA account and immediately purchased stock in a Canadian company. The stock has gone up in value .02 cents. It just sits there. I have not sold any since I originally opened the account. How does the IRS treat something like this? If a TFSA goes up in value as the stock goes up, is this taxed even though I haven’t sold anything or made any profit? I am worried that I may be taxed as the value goes up on paper but I still won’t have much money to pay tax because it’s all on paper. Or does the IRS only tax when you sell and make an actual profit? Thanks.
Did you check the links to Max Reed’s articles? If you did, you would understand that no one, not the IRS, not H&R Block, not you or me knows how to treat a TFSA. The IRS simply has not clarified the issue in spite of repeated entreaties to do so. They don’t seem to care. The Canadian gov’t made them ‘not reportable’ for good reason. 0.02 cents! Wow! Forgetaboutit.
My main concern is “if” the stock (in the TFSA) goes way up, before I want to sell it, am I going to be stuck with a big tax bill even though its all on paper. OR: is tax only charged when someone sells the stock.
Tax is charged if and when they know about a gain. Max Reed is a true expert and even he doesn’t know how to report them.
“My email address in this post (above) is used, and is meant to be used, only for those who wish to” spam it with any kind of spam, which only by random coincidence might have any relationship, similar to or opposite of any topic discussed on this site. After all that’s why the e-mail address is presented publicly.
Spam site www . offshoreinc365 . eu has IP address 213.186.33.95 and DNS servers at 46.105.207.200 and 46.105.206.200. Tha abuse contact for all of these is abuse@ovh.net. ovh.net used to be a spam-only operator, bouncing spam complaints back to the victims, but they might have reformed.
“THE DATE: SEPTEMBER 13, 1979 (37 years ago):
FROM: SENATOR GEORGE McGOVERN
TO: THE PRESIDENT OF THE UNITED STATES (JIMMY CARTER), THE WHITE HOUSE
[…] and a justification for any differences from treatment they would have received at home…”
‘My dear esteemed former colleagues,
As a former senator myself, and president, and constitutional expert, and with connivance of the Supreme Court of the United States, I am just the one to justify this just justification.
US citizens located outside the US can be deprived of life without due process by droning, and can be abused in any other manner whatsoever, because the US constitution has jurisdiction only within the borders of the US. The reason we can tax US citizens located outside the US is that the 16th Amendment is an exception to the preceding rule. The exception is mandated because these are the Exceptional States of America.
If you think this just stinks, just remember one thing:
The Office of the President of the United States has B.O.”
@Phil
The simple solution is to stop being an IRS kicking ball and give them and all of the parasites in the tax compliance industry your middle finger.
@ Middle Finger
I like your simple solution but it would feel a whole lot better if there were more than a handful of middle fingers defying the absurdity of the US extraterritorial tax and penalize regime.
@Embee, maybe fists would be better.
If that’s true that makes no sense at all. If someone of modest income buys stock and gets lucky when it goes up, what if they want to hold onto it for a while and let it grow higher? If you have to pay taxes on the gains every year (even though you don’t sell and its on paper) how can you retain it? If you don’t have liquid cash to pay for the on paper gain, you would have to sell the stock just to pay the tax? Am I missing something?
@Phil – if you own the shares directly, then you only have to pay tax when you sell. If you own them inside any structure that the US considers a foreign grantor-trust, then you pay tax every year on the appreciation, realized or not. There are two possible solutions: a) renounce so that you’re no longer subject to two incompatible sets of tax rules; b) buy the shares directly (move them out of your foreign grantor-trust if you can). Oh – and when selecting shares, buy only companies with active businesses; investment companies will probably be PFICs and you don’t want to open that can of worms.
@Phil
In Canada, you only pay tax on 50% of your realized capital gains, that is 50% of the profit after selling and deducting costs, the 50% gain is taxed at your individual tax rate.
If your investment is US stock, the same rules apply, however I do not know what the rules are for other types of US investments.
Everything goes to crap if you have been identified as a US person and your investment is under US jurisdiction, if that’s the case then you probably will not want to invest your money in the US market because of the double taxation, it will take a bigger chunk out of you profits, and it also increases the risk because the reward will be lower.
I think you will find better opportunities elsewhere to invest in, or set up a proxy that you can use to invest through, just do not tick off any of the boxes that will red flag you as a toxic US Person.
@Phil
Every time u get a cheque from your stocks that u own directly… that is considered capital gains… the US taxes that… if u re-invest the dividends… that is considered capital gains.. taxed again… if u did like what some of my elders did… re-invested half and got a cheque for the other half… tax & big headache… if u sell… again taxed on capital gain on the entire amount u made… the elders in my family bought some stocks for a few thousands… held it over 30+ yrs… minor dividends… firm changed name after name with stock exchange… split… etc… see my headache… then to add to my headache… firms that went belly up… had money left over & cut a cheque to shareholders… more then they invested… see how this shit can snowball until u do not know what to do? No expert can figure this out easily… here is even worse.. u got to go behind them to make sure they are doing it correctly. I can’t even balance my cheque book… yes.. I still use that… if u don’t cash it… its not my problem… that is how I balance it…
“In Canada, you only pay tax on 50% of your realized capital gains, that is 50% of the profit after selling and deducting costs, the 50% gain is taxed at your individual tax rate.”
I used to think that way but the former Revenue Canada proved me wrong, but the former Revenue Canada didn’t abide by its own rules so I don’t really know the answer. Here’s as much as I could figure out from an impossible-to-interpret Interpretation Bulletin. If your purpose in buying the shares (or bond or other investment-style investment) was hoping for income in the form of dividends (or interest or other kind of ongoing income), then when you dispose of the investment your gain or loss goes on capital account. But if your purpose in buying the investment was a hope to profit when disposing of it, then when you dispose of the investment your gain or loss goes on income account. But you can ELECT to have all of your Canadian investments go on capital account regardless of what your purpose was in buying each investment in the first place.
“If your investment is US stock, the same rules apply,”
Again from trying to interpret that impossible-to-interprret Interpretation Bulletin, no the same rules do not apply. For each investment you have to start with what your original purpose was in buying the investment, and they you’re stuck with it. You do not get a chance to elect to put everything on capital account.
This rule also hits non-residents of Canada who buy Canadian investments. We do not get a chance to make that election. I stopped buying Canadian investments when I saw that the paperwork was essentially impossible to do correctly.
“however I do not know what the rules are for other types of US investments.”
As far as I can tell, bonds are treated the same way. Mutual funds might be too, since Canada isn’t known for pficking up its mutual fund investors the way the US does.
@Norman Diamond
My understanding is that a dividend is treated somewhat differently from a capital gain in terms of taxation, however I’m having some trouble understanding what your misunderstandings are, but then again I always have trouble understanding taxes in general because no one really understand the rules, not even the CRA.
As for what the US does with taxation, I’m totally ignorant because I’m a Canadian residing in Canada and I will never pay those assholes a penny, so I’ll never bother learning about their stupid overly complicated taxation process.
As for Canada, the taxation system is a mess, it’s full of corruption (eg KPMG scandal) and I know for a fact that the taxation compliance industry lobbies (bribes) the government for ever more complicated impossible to interpret tax rules.
Meanwhile, our “sunny ways” PM is accosting MP’s and acting like the bully he no doubt is, and those accosted MP’s are making themselves look like opportunistic a-holes while over blowing the situation beyond all reason. Our taxes are paying these idiots a lot of money to do an important job, but they are NOT doing anything, just posturing and acting like clowns. I cannot stand the lot of them and I cannot stand knowing that my taxes is helping to fund for this circus. We should form our own alternative government and just ignore these idiots, nothing will ever change if something is not done about it.