US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
@AussieJones – the US Australia tax treaty dates from 1982 and was amended in 2001. You can view/download easily enough at the IRS web site ( http://www.irs.gov/Businesses/International-Businesses/Australia-Tax-Treaty-Documents ). On a quick read, there are some material differences from the Canadian treaty. The one big difference that may matter to you is re the Revenue Rule.
The 1994 Canada treaty contains a partial abrogation of the “Revenue Rule”. The Revenue Rule is one of more or less general application under International Law and provides that one state will not collect that taxes of another within its borders. The Canada treaty provides that Canada WILL collect taxes for the US, but then provides that it WON’T from Canadian citizens even if they are dual. Australia doesn’t have the abrogation of the rule as far as i can see and thus doesn’t need to protect Australian citizens. It appears that Australia simply won’t collect tax for the IRS period. From your point of view in Australia, simpler, neater and cleaner.
On a quick read, the Australian treaty also seems to have a cleaner prohibition on double taxation than the Canadian. I don’t see, for example, protection of retirement plans per se, but PENSIONS are given blanket protection. Not sure how that shakes out in Aussie, but I think your fortress walls look pretty good. The US has, in any event, violated both treaties with double taxation in numerous spheres that neither government seems too exercised about.
Exchange of Information – pre IGA at least – is pretty sparse in the Australian treaty and is certainly case-specific as opposed to enabling fishing expeditions of the IGA sort. The limitations in use are quite specific in Australia and would arguably prohibit use to make FBAR demands since that is not a “tax” to which the Convention applies, but is a penalty for non-filing. All things considered, I think Australia has done a pretty good job of protecting its citizens with its treaty and hasn’t a lot of lessons to take from Canada. The virtues of the Canadian treaty for the afficionados have a lot more to do with the nuts and bolts of corporate tax, treatment of dividends and interest payments where my understanding is Canadian business is able to get somewhat more favourable treatment (and vice versa) due to our much higher rate of integration into the US economy.
In summary, there are more Canadians (you are correct) caught in the slipstream of the FATCA jihad than Australians and our chances of stopping or diverting the tide are thus somewhat better. Australia have not been slouches though.
Somewhat off topic – I spent a bit of time allowing my head to explode trying to puzzle through the FATCA maze. Anyone not interested can change channels, but here goes:
My first reaction was to be absolutely floored by the hubris of it all. In Washington DC, they have passed the equivalent of Tiberius’ order that all the world come to their home town to be counted! Imagine ordering EVERY SINGLE financial institution IN THE WHOLE WORLD to spend millions of dollars in fees on consultants in order to provide the US with a complex and detailed registration of that institution and all of its subsidiaries, nominating an individual in each organization to have personal penal responsibility for filings etc. Because of the nature of pulling threads from a sweater, the definition of what is a financial institution (and I simplify greatly as there are numerous categories) is so broad and expansive that some family trusts and the like could get swept into it, so suffice it to say that the number of organizations intthe world that Caesar has demanded be registered is VAST and includes a lot more than your neighborhood big bank. They then provide for a sanction regime that provides – worldwide – that no person may trade with any other person who isn’t registered with them except if the registered party withholds. Now the problem is the registered party may not be able to withhold under local law – no problem, they withhold or pay from their own pocket, it’s all the same to Uncle Sam.
The subject matter of withholding though is where the scheme breaks down. At the end of the day, a big range of US source interest, dividends and similar amounts are swept in, but they can be pretty neatly avoided by any normal person in a normal life. If, for example, an IRS-shy clinging nationality American living in Australia could not live without owning large cap US stocks with their dividend stream, Canada at least has a large enough suite of ETF’s covering almost every conceivable segment of the US bond and equity markets that they would only have to restrict their “US investing” to ETF’s that acheive the same or a similar profile. The same sort of thing could theoretically be done by a Russian bank that was unable to register with FATCA. They could still do business with Credit Suisse in Euros, Yen etc in Geneva if they wanted to. Were they to want to do business with US bonds or equities, they would bear a transaction cost in going through an intermediary. This would be a speed bump for a long term investor, but obviously would impair the profit outlook of a bank whose business is charging someone ELSE for acting as THEIR intermediary.
The thing is an enormously complex house of cards. The IRS seems to be enthusiastically pretending the emperor is well-clothed and is about to go on parade in the rain wearing golden raiments spun from cotton candy. No other party has the tiniest incentive other than fear to help them which means that co-operation will be about as efficient and worthwhile as the average Soviet factory worker fulfilling their five year plan.
I knew all of this at a high level already I guess, but spending several hours wandering through the insanely complex yet optimistic IRS web pages left my shaking my head in disbelief. Our Charter challenge is doing them a favour since they are going to break themselves in two trying to make this work as is. Their only hope of saving face in the long run is paring back to something like a multi-lateral GATCA which will inevitably have to be residence based since nothing else works. Sorry for boring all of you who knew all of this.
Anne Frank, thank you so much for that!
To Aussie Jones. Here are some links that might be helpful:
http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/2/
http://isaacbrocksociety.ca/2012/02/13/3200/
http://www.moodysgartner.com/irs-says-fbar-penalties-not-collectible-under-canada-us-treaty/
http://www.bdo.ca/en/Library/Services/Tax/Documents/Tax-Bulletins/Tax-Consequences-for-US-Citizens-and-other-US-Persons-Living-in-Canada.pdf
And, the comment from Anne Frank will be especially helpful to you, Aussie Jones.
The only countries that have collection assistance provisions with the IRS, are Canada, Netherlands, France, Sweden, and Denmark. In general, it is a matter of International custom that one country will not collect taxes for another.
@ Anne Frank
Not boring at all! In fact I’ve tucked it away in my “Best of Badger” folder which actually has the “Best of Everyone” in it now. Aussie Jones will find some relief in your analysis of the Aussie situation. It really does sound like Canada and the 4 others listed by RMA were, in the past, too eager to offer collection services for the IRS, even if there were some limitations included.
@ Calgary411
Thanks for providing all those links for Aussie Jones. I had just woken up from a nap when I read his post so even though I remembered John’s NZ presentation my head couldn’t click well enough to direct him to the source. And of course there are all of Osgood’s great submissions, even though he’s a KiWi, which you gave him. I expect both NZ and Oz will end up with similar legislation. The anti-Fatcanites there should be working in tandem.
@Anne Frank
Thank you for posting that great information on the US-Australia tax treaty. I suspect the provisions are similar in the New Zealand version. With regard to IRS collection in these cases (and other similar treaties), I see 2 potential future issues:
Firstly, there is a OECD “Convention on Mutual Administrative Assistance in Tax Matters” to which most countries are now signatories and does appear to allow states to seek collection of taxes from other jurisdictions. The NZ announcement of this is here: http://taxpolicy.ird.govt.nz/news/2013-11-22-nz-ratifies-multilateral-tax-convention.
Secondly, it is surely possible that the US may pass some other future extra-territorial law that will require foreign banks or governments to collect or freeze assets that they consider “penalties” or whatever. Some other sanction could be used to enforce it. You would think that other governments would resist such a threat but based on how they have capitulated to FATCA with the IGAs, I don’t think anything can be taken for granted.
Let’s hope that governments will eventually wake up to the threat on their tax and asset base that is posed by FATCA and US CBT/FBAR.
Thank you folks for all the information.
Unfortunately, there is something that seems like a game changer. This is the evidence to shunrata and Anne Frank in particular might like to see. It seems there is increasing intergovernmental “cooperation” on foreign tax revenue collection.
Specifically, from 2011 and updated in 2013:
http://law.ato.gov.au/atolaw/view.htm?docid=%22PSR%2FPS201113%2FNAT%2FATO%2F00001%22
“Australian Taxation Office
Practice Statement Law Administration
PS LA 2011/13
SUBJECT: Cross border recovery of taxation debts
PURPOSE:
To outline:
·
the options available to the Australian Taxation Office (ATO) for the recovery of tax-related liabilities where the tax debtor is located outside Australia, and
·
how the ATO deals with a request received from another country for assistance in the recovery of a tax debt owing to that other country.”
Starting in particular with item 57:
“57. A foreign state may formally request the [ATO] Commissioner to collect an amount (in Australian dollars) and/or take action to preserve assets to ensure the collection of an amount, on behalf of that foreign state, from a debtor that owes a tax debt to that foreign state (a ‘foreign country debtor’).”
My interpretation, and I’m no expert with these things, is that the US IRS may ask the AUS ATO to collect, thus getting around the AUS court system! That is, the US IRS does not have to request for collection through an Australian court of law.
The second point is that, I’m told, the “savings clause” in the US – AUS tax treaty allows the US to apply US tax law, the contentious ones of taxation of Australian assets of Australian residents who are deemed by the US to be “US persons”. Pensions are post-retirement. Specifically, I think the tax treaty want to exclude the Australian “Age Pension”, which is a formal pension from the AUS government, but is means tested and so does not really apply to the middle class (the retirement accounts are for the middle class and above). Retirement savings accounts (called superannuation here) are pre-retirement. Thus, as the US does not anywhere recognise Australian retirement accounts as bona fide retirement accounts (because of course Australian retirement account providers have not registered with the US under US law as US retirement accounts), these are taxable by the US.
That’s the main points. Hard a long day at work–will be back tomorrow!
@Aussie Jones
I believe those sections relate to the OECD “Convention on Mutual Administrative Assistance in Tax Matters” that I referred to above. I wonder how the ATO, (or any tax authority) would react if it were to receive collection requests from the IRS for alleged taxes owed to them levied on income earned in Australia by Australians. That is clearly not the intent of these provisions, but as only the US operates extra-territorial taxation, who knows how it may be applied.
Why not write to the Australian Minister of Revenue (or equivalent) and ask how they plan to deal with any collection requests of this nature from the United States on income earned in Australia? At some point these bozos need to wake up and understand the realities of US CBT.
One ray of hope is that I cannot see how this could possibly apply to FBAR penalties as they are not even part of the US tax code. A small crumb of comfort in the unholy mess.
Great info, everyone. Thanks.
The problem with the “Multilateral Convention” is that it is presumably meant to apply fair tax laws from one jurisdiction to an unjust individual from there who has relocated to another jurisdiction intending to escape the law. However, it does not specify how individuals in another jurisdiction are to be protected from unjust tax laws arising in a foreign jurisdiction. The Multilateral Convention could easily be interpreted that it is not up to the local tax collection agency (e.g., Australian Tax Office) to judge the foreign (IRS) tax claim, but only to enforce it, in the spirit of “cooperation”. From that perspective, the local agency (e.g., ATO) would expect local (e.g., Australian) individuals to appeal against the foreign claim in the foreign jurisdiction (US) directly with the foreign tax collection agency (IRS).
It is extraordinary that in this situation “the CRA has stated that it will not help collect any debts owing to the IRS by individuals who were Canadian citizens when the debts arose, even if they were also U.S. citizens.” (Calgary411 post above dated May 8).
I will assume the best direct evidence of that is the statement is “Furthermore, our Government has been clear that CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time (whether or not the individual was also a U.S. citizen at that time).” from the letter by Finance Minister Flaherty dated June 15, 2012 in http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/2/? (If there should be a better evidence source, let me know.)
Those of us in other countries such as Australia should make our governments aware of how Canada protects its citizens and its national interests in this way. Osgood has suggested to write to my government (Australia) to ask what it would do if the IRS presented a tax claim arising from the Australian assets of an Australian citizen at the time of liability. Yes, and it helps now armed with the evidence of that position taken by Canada. Still, it is not at all clear that Australia (or other governments) will have the courage to explicitly state what Flaherty has stated, thereby providing comfort and reassurance to his citizens.
@Aussie Jones
I think we all need to press our respective governments to make statements on this issue. The reality is that in the vast majority of cases there is no precedent for this, and no one knows how the US plans to proceed once they receive FATCA data. They probably don’t know themselves, it is a moving target.
Glad that at least one US homelander says “Doug Shulman, the Worst IRS Commissioner Ever.”;
“………. He was also busy shooting jaywalkers. International tax enforcement is considered Doug Shulman’s greatest success — but there was no reason the pursuit of wealthy international money-launderers had to also terrorize American expatriates whose offenses were to commit everyday personal finance. Many folks have been hit with ridiculous penalties for not filing FBAR reports that they had no idea existed. These folks are often people who married overseas or moved out of the U.S. as children, but were presumptively treated as international money-launderers when they tried to come into the system, and were hit with enormous penalties — often when little or no tax had been avoided.
It’s hard to imagine that an agency that can find ways to simply wave away the ACA employer mandate couldn’t find a way to allow expats and individuals without criminal intent to come into the international reporting system without risking financial disaster. The states that allow non-resident non-filers to come in by paying five years of back taxes provide an obvious model.”….
@badger..
We know that, but do you have a link? 🙂
@ Just Me
This is probably it …
http://rothcpa.com/2014/05/tax-roundup-5914-worst-ever-edition-and-its-scandal-day-365/
Unfortunately for us Aussies (and others where our governments failed to put in an “abnegation clause”), where the Canada US Tax Treaty has article Article XXVI A “Assistance in Collection” which states in paragraph 8(a) “No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that (a) 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” – the US-Australian tax treaty has no such wording (as Anne Frank noted).
Thus, one conclusion is that Canadians are protected, but Australians have no protection at all. The argument that an abnegation clause is not needed is counter-evidenced now by the multilateral convention (in Australian Tax Office PS LA 2011/13 “Cross border recovery of taxation debts”, as I mentioned in an earlier post) stating the foreign tax collection agency (IRS) need only ask the Australian Tax Office to collect, and no explicit statement of abnegation exists anywhere to guide the ATO.
This is a very scary situation for those of us in this situation! It appears that Canadians are well protected by their government, and Australians (and other countries with no abnegation clause) are entirely unprotected. (If you see protections that I haven’t seen, let me know!) In order for Canadians to understand the situation that Australians and others are facing, imagine that you did not have the abnegation of IRS claims against Canadian citizens, and also that your retirement savings accounts were not recognised as retirement savings by the IRS. While the IRS has not yet fully exploited its new powers, we see nothing to stop them.
What should we in this situation do? How can we best argue to our governments to introduce the same level of protection that Canadians have?
Is the only argument available simply to say to the Australian government (or other governments): are you aware of the protections that the Canadian government provides its citizens? Please follow the Canadian precedent and provide us with the same.
Supplementary question. This is just a brainstorming question. Are there other examples besides Canada where governments have formally declared they won’t collect US taxes on their citizens? That is, other countries that have the equivalent of an explicit abnegation clause. Perhaps the precedent from these other countries as well can be added to the argument to the Australian government.
Thank you.
And if you have questions about the Aussie situation, I am happy to share what I know.
@Aussie Jones
That is very interesting (scary) information for Americans passport holders or accidental Americans just waking up to what the Obama administration has been up to with FATCA..
The impact also, as related to the Long Term Aussie Green Card holders, like my wife, who might return to Australia, but find (if they are NOT fully compliant) the Aussie government assisting on collecting U.S taxes and/or penalties on them, even though they are Aussie Citizens should scare the Bjesus out of them. But of course, the tax authorities and bureaucratic elites depend on ignorance of the general population to do what they hell they want.
This is why I generally warn any Aussie thinking that they would like to live in America to think again. If they go, go only as visitors, and DO NOT get a Green card unless you plan on never returning to Australia again.
Thanks Em for providing the link I left out – to a post that says what we already know but enjoy reading from a US source!
@Badger…
Thanks… I have retweeted all of Joe’s tweets…
Here is why Shulman was the worst ever. Joe’s tweet responses..
https://twitter.com/Meg_Shreve/status/464546555077591040
@Em….thanks to you too…
Great tweets @Just Me. Thanks!
@Aussie Jones
Thank you or the information.
Unfortunately now I’ve gone from paranoid to terrified. 🙁
@Aussie Jones
You raise excellent points and unanswered questions. Last year I had correspondence back and forth with New Zealand IRD and the NZ Minister of Revenue and asked the question about protection similar to Canada’s on several occasions. No satisfactory answer was ever provided.
The interaction between the Multi-lateral convention and the respective DTAs is largely unknown and untested, perhaps even by governments themselves. The multi-lateral agreement may have looked like a reasonable thing to agree to, but how many of them were thinking of FATCA and US enforcement demands in that context?
There is also the option to “reserve” against the collection aspect of the multi-lateral convention (i.e. make it ineffective). I believe that Canada did that, but I know New Zealand did not and I don’t know where Australia stands.
I completely agree with you that countries such as Australia and New Zealand need to come out with affirmative statements with how they plan to deal with collection demands from the US. In my opinion, in New Zealand anyway, politicians and bureaucrats simply do not understand the far ranging implications of CBT/FBAR and how this could be applied to ruin people, their own citizens. At this stage, I am not sure how that perception can be altered.
Can a US person be forcibly extradited to US for tax reasons, and will the CRA collect US tax/FATCA/FBAR penalties on a naturalized Canadian citizen and Canadian taxpayer living in Canada?
Seamus
Seamus. No and no. Definitely. Period. Fugeddaboudid.
I have drafted a letter to send to my elected representatives in the Australian Parliament. I would welcome any comments or suggestions on this. In particular, I’m no expert on the Multilateral Convention, but am just applying a common sense interpretation–let me know if any of that is incorrect or could easily be counter-argued by the IRS.
Why should non-Australians care? This letter is relevant to more than Australia, as other most countries are probably in the same situation and this letter could be amended for them by substituting their country for Australia.
For Canadians, please consider that it is in Canada’s interest to strengthen the movement against US tax imperialism in other countries.
It is a long letter, in order to lay out the argument hopefully convincingly, so if the IBS admins think it is too long for here then if they can think of a way to move the letter but with a link from here, that is okay by me.
—————————-
What is our government doing to protect its citizens against US tax imperialism?
US tax imperialism arises from US citizenship based taxation (CBT). CBT means that the US deems as “US persons” anyone with US citizenship, and all US persons are subject to US taxation based on worldwide income and assets regardless of country of residency or dual citizenship. The US and Eritrea are the only countries in the world that practice CBT. The United Nations (and the US) has condemned Eritrean CBT. The rest of the world follows residence-based taxation. The logic is simple: taxes should be paid to the country in which you live and use its services.
The central problem is that the US taxes the foreign (non-US) assets of people living a normal life in a foreign country who may be citizens of that country. For example, the US taxes the income from Australian assets of Australian citizens (dual Australian – US citizens) resident in Australia, which have already been taxed by Australia as per Australian tax policy.
Not only is the extra-territorial reach of US CBT unjust, but its policies can be contrary to Australian law and punitive in nature. For example, the US claims it can tax Australian superannuation accounts same as any other investment, not recognising the nature of superannuation as special retirement savings under Australian law—that’s astonishing arrogance, isn’t it? Similarly, Australian mutual funds will be categorised and treated punitively as PFICs (passive foreign investment corporations), and in effect taxed as income instead of capital gains. Thus, Australian superannuation and mutual funds are treated differently and more harshly than American retirement accounts and mutual funds. That’s because Australian superannuation and Australian mutual funds are non-US and not registered in the US as per US law.
For a more detailed analysis of the evils of US CBT, too lengthy to go into in detail here, see “The End of Taxation without End: A New Tax Regime for U.S. Expatriates”, by Bernard Schneider, published in the Virginia Tax Review (Vol. 32, No. 1, 2012), available from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2186076, and American Citizens Abroad (the largest organisation of its kind) “Residence-Based Taxation: A Necessary and Urgent Tax Reform”, Working Paper, updated March 2013, submitted to the International Tax Reform Working Group of the US House of Representatives’ Ways and Means Committee, available from http://americansabroad.org/issues/ under “ACA proposal”. These articles not only detail the undesirable consequences of US taxation based on citizenship and propose that the US come into compliance with the rest of the world by switching to residency based taxation, but also argue this change is in the US’ best interest.
US CBT is obviously not in the interests of other countries. Why would Australia or another countries allow the US to “plunder” wealth from their countries and from their citizens via US CBT, a one way flow because the other countries do not follow the same CBT? Furthermore, US CBT violates Australian sovereignty and the rights of Australian citizens to have their Australian assets governed by Australian law and policy, and not by that of a foreign government. Tax imperialism is the new form of imperialism.
Other countries have, perhaps without understanding the full significance, signed nominal agreement to US tax imperialism through bilateral and multilateral treaties, including the OECD Multilateral Convention (The Multilateral Convention on Mutual Administrative Assistance in Tax Matters AMENDED BY THE 2010 PROTOCOL, available at http://www.oecd-ilibrary.org/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en ). According to the Multilateral Convention, the US IRS may ask the Australian Tax Office to be its collection agency, thereby going around the Australian court system. Imagine that, the US IRS doesn’t even have to do its own “dirty work” of collection of CBT claims in Australia, but simply asks the Australian ATO to be its collection agency in Australia.
The country that arguably has the most experience with and given the most thought to the problem of US CBT is Canada, which is obviously next door to the US and has the largest number of US persons living there. How does Canada handle it? The Canadian government explicitly protects its citizens against US CBT. 1) The Canada — US Tax Treaty has article Article XXVI A “Assistance in Collection” which states in paragraph 8(a) “No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that 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”. Let’s call that the abnegation clause (for abnegation of Canadian enforcement of US CBT claims against Canadian citizens). The Finance Ministry of Canada has specifically acknowledged that the Canadian Revenue Agency will not be the collection agency for the US IRS against Canadian citizens: “[O]ur Government has been clear that CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time (whether or not the individual was also a U.S. citizen at that time),” letter by Finance Minister Flaherty dated June 15, 2012 available at http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/2/. 2) In the Canada – US Tax Treaty the US recognises Canadian registered retirement accounts as retirement savings accounts and treats them as such (i.e., does not tax the annual gain inside the retirement savings account).
Will the Australian government protect its citizens against US CBT as the Canadian government has protected its citizens? If the Australian government needs more information before deciding, one thing it can do is ask the Canadian government for greater details as to why Canada does this.
There is an immediate step the Australian government could take, and a longer term step. The longer term step is to re-negotiate the Australia – US Tax Treaty in line with the Canada – US Tax Treaty. As the US has recognised the principle that a foreign (Canadian) retirement savings accounts is indeed retirement savings accounts for citizens of that country, it would seem obvious for the US to extend this principle to other countries, including Australian superannuation accounts. Similarly, Australia should negotiate the same abnegation clause as Canada has. The US has lived with Canada’s abnegation clause for a number of years now, and it has not harmed the US’ intent to catch US residents hiding assets in Canada.
In the short term, the Australian government through the Treasurer should clarify the issue and remove the fears of dual Australian – US citizens by stating, in parallel to what the Canadian Finance Minister stated: “[O]ur Government will not collect the U.S. tax liability of an Australian citizen if the individual was a Australian citizen at the time (whether or not the individual was also a U.S. citizen at that time).” The basis for this could be in the Multilateral Convention which states that a country may deny a request from another country for tax collection with an explanation (Article 20 paragraph 2). The Multilateral Convention also states in “Article 21 – Protection of persons and limits to the obligation to provide assistance” Paragraph 2: “the provisions of this Convention shall not be construed so as to impose on the requested State the obligation:
a. to carry out measures at variance with its own laws or administrative practice or the laws or administrative practice of the applicant State;
b. to carry out measures which would be contrary to public policy (ordre public);
c. to supply information which is not obtainable under its own laws or its administrative practice or under the laws of the applicant State or its administrative practice;
d. to supply information which would disclose any trade, business, industrial, commercial or professional secret, or trade process, or information the disclosure of which would be contrary to public policy (ordre public);
e. to provide administrative assistance if and insofar as it considers the taxation in the applicant State to be contrary to generally accepted taxation principles or to the provisions of a convention for the avoidance of double taxation, or of any other convention which the requested State has concluded with the applicant State;
f. to provide administrative assistance for the purpose of administering or enforcing a provision of the tax law of the applicant State, or any requirement connected therewith, which discriminates against a national of the requested State as compared with a national of the applicant State in the same circumstances.”
I am not an international tax lawyer, but from a common sense view US CBT against individuals violates a, b, e, and f, and possibly also c.
In terms of Australian politics, this is one of those perhaps rare issues where there is no opposition – that is, no one (or almost no one) in Australia will support US CBT against Australian citizens.
Indeed, the solutions proposed here are solutions to the vexing problem of how does the US chase down US residents hiding assets overseas to avoid paying their US tax debts, while not punishing US–born persons who are living a normal life abroad as dual citizens in their adopted country.
One could write much more about the problems and issues caused by US CBT, but I’ll stop this letter here. In sum, three questions to the Australian government. 1) Does the Australian government agree with and support US CBT? 2) What does the Australian government think of the Canadian example of how it protects its citizens against US CBT? 3) Will the Australian government take action to protect its citizens against US CBT? (This protection could be in the form of the two steps mentioned above, or their equivalents.)
Thank you for considering this issue.
Many thanks, KalC. Another thought – ALL Canadians should be concerned about this, not just US persons, because of sovereignty issue.
Seamus