FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See FATCA Discussion Thread (Ask your questions) for earlier discussion.
@noone says:
Try this for hypothetical answers: No, one, Canada, Hochelaga, Canada. Ditto for questions about co-applicant, W-8BEN: Hochelaga, Canada. Done. And if you don’t invest in the US, you don’t need to file the W-8BEN. I’m Canadian. I am not advertising any US “indicia.”
I see much has been discussed about the ability or legality of the Canadian Gov or courts to collect so called taxes ‘owed’ to the IRS by Canadians also classified as US persons.
The Gov does not have to do a thing, the banks will do it for them.
In Switzerland banks are now withholding 30% of the money in accounts held by ‘US and ex US persons’ unless they can prove US filing tax compliance.
I recently read that Zurich University Hospital has stopped treating North American ‘medical tourists’, and US visitors fearing million-dollar claims from litigious patients if operations go wrong. Hospitals in canton Valais have also adopted measures to protect themselves against visitors from the United States. This seems to be connected to FATCA and the ability of the US to force banks to pay the fine from the bank account held by the physician in Switzerland (and also the hospital) if there has been a judgement against him in the US courts.
I am sure this will spread as banks become agents of the IRS.
CBE is right, get out of the banks into credit unions, gold or your mattress.
BC Doc,
Thanks for that info – RBC is already breaking the Charter. On-line brokerage applications are followed up with paper copies of ID documentation. I wonder if RBC DI will still accept a provincial DL and SIN or if they will now need a birth certificate or passport.
@Heidi, yes I’ve seen a few reports over on the English Forum of people having part or all of their accounts frozen until they can prove their US tax compliancy in some way, either through proof of entering an OVDP or with copies of their recent US tax filings. I had a letter from PostFinance regarding FATCA as I hadn’t yet told them of my renunciation last year. I sent them a copy of my Streamlined Questionnaire and then later, then they asked for it, my OH and I had to sign W-8EN forms for our account with them. Not sure if the Canadian banks would ever get around to taking the same measures as I’m not sure what, if anything, the Canadian IGA says about bank penalties. The Swiss banks are trying to reduce their penalty payments as much as they can by proving they’re doing their best to identify/turn in Amercian clients who may, or may not, be compliant.
Not heard anything about problems with hospitals getting paid though. Do you have a source for that info? I wouldn’t have thought even with FATCA that there was any way a phyisican’s account would be affected just because some American has a judgement against him in a US court. Sounds more like scaremongering to me as only American clients and/or any immediate relatives, i.e. wife, would be affected. A physician? Not really. So he treated the guy, so what? His account is nothing to do with his client and I can’t see any way that the IGA would allow his account to be touched.
OK, I have a really dumb question. You’d think I would know the answer to this, I seem to have a bit of a handle on the big picture but I’m missing a few of the dumb details.
I have been with one of the big banks and their investment arm for 35 years, they have NO indicia on me although my investment person knows my history. (Should I call him and ask what he is going to do? We have had a LONG term relationship that verges on friendship, is that a really idiotic thing for me to do?) In the meantime my thoughts were until I hear from them re my status I will stay put as it is so convenient. If they ever ask me anything I will just close my accounts. Is that a silly strategy? Will it be too late then and they might freeze my accounts and not let me close them? I do plan on opening a credit union account next week, just to have available.
@Medea.
I think the journal was ’24 heure.’
I was also told my a Swiss physician colleague of mine that there is concern over bank access.
Here is a general link but not the one I read
http://www.swissinfo.ch/eng/archive/Zurich_hospital_turns_away_US_health_tourists.html?cid=45738
@medea PS…
It isn’t the American who would be scared of having a judgement against him, it is the Swiss physician/hospitaland the risk of treating Americans. The banks are being held to ransom with the threat of a 30% withold if they don’t do as they are told, and they are all desperate to have access to the American market….don’t ask me why, it’s set for a big fall.
@charl: now I don’t want to frighten you, but you could be one of those special cases where someone who is under the reporting threshold finds his information sent to the IRS:
http://isaacbrocksociety.ca/2014/02/10/the-potential-hazard-of-the-over-zealous-bank-inquisitor/
@Petros
“The change of circumstance: the manager Jim knows Johnny personally, and since Jim is a complete dick (enough of these sort of people in every country), he gives Johnny’s account information, as specified under FATCA, over to the CRA, which then sends it to the IRS.”
Reckon I’d be Johnny! The question is, is Don a Dick? It seems everything about me is a “special case”…..damn, and plain vanilla is bad enough! Both John R and Stephen shake their head at my situation, sure makes me feel special…and REALLY scared. I am going to live under a chicken coop! Should I just plain out ask him what he is going to do with me? Or just move it all, ruin our friendship and as USXC is fond of saying: Sauve qui peut! What happens if they ask, you don’t answer and then just move your stuff? I’m getting burdened down with the dirty details. You’d think I’d have figured it out by now but I can readily turn into an ostrich and often live with a troublesome mañana attitude. Well mañana is here!
There are other possibilities: (1) You could join a lawsuit against the Canadian government; (2) you could ignore the letters from the IRS (this should work if you are a Canadian citizen); (3) you could ask your advisor Don, what he is going to do. If Don is not a dick, then perhaps the third option would give you some peace of mind.
@Charl,
As you may know, the IGA states that for accounts over $1 million, a financial adviser with personal knowledge of a US person client must report the US person. It doesn’t say that this is an option for the bank; it must be done. I doubt any employee is going to risk their job for any client.
The IGA also allows for accounts under $50,000 not to be reported, but this is an option for the individual FFI to decide.
Many people guess that many banks will not use the $50K exclusion. There’s no reason to think that banks won’t report accounts where the adviser has personal knowledge even though the account is less than $1 million.
Still guessing, I can’t imagine that any employee or institution can or would do anything about you moving your money elsewhere. It would take quite the dick indeed to notify your new bank about his personal knowledge of you. If you don’t move it before July 1, then what? Technically, if it’s on their books on July 1 it could be reported.
The problem is, where to move it? I’ve written to 8 credit unions asking if they are “non-reporting” due to having only a “local client base”.
@Heidi, thanks for that link, I hadn’t seen that. Still, I don’t think it’s related to FATCA, I think it’s more that the hospitalis don’t want to be sued under the US court system which tends to award millions in payouts.
It seems to me that there’s a misunderstanding regarding FATCA and who might be affected. If a Swiss physician treats an American and subsequently ends up with a judgement against them from a US court they would have the choice of paying up or not. I suppose if it wanted to the US government could request that the Swiss government have his account frozen until he agrees to pay, but that’s nothing to do with FATCA. That would come under a different inter-governmental treaty and I seriously doubt the US government would persue it in the first place or that the Swiss government would agree to do it in the second. FATCA only affects Americans and people related to them should they have things like joint accounts. There’s no basis in FATCA or the Swiss-US IGA for persuing anyone else.
@medea
I understand what you are saying and I hope that is so. But Swiss banks now answer to the American Gov, in fact they have no allegiance to anyone, except themselves and their ability to make money.
I think FATCA is the tip of the iceberg, the American Gov can now pressure the banks, they can threaten a wiithold on business transactions unless the bank releases the physician’s money. The Swiss Gov has little influence in what the banks do now. Why now are Dr’s refusing to treat Americans? These huge litigious claims have been around for years, it’s only now that the banks have been under threat that Dr’s are refusing.
PS @Medea.
Surely the banks don’t have the legal right to block the accounts of EX US persons (with CLN’s) asking them to prove they have been tax compliant, yet they are doing this. These people are now Swiss, or another nationality, yet Swiss law seems powerless to stop the banks. The banks now take their orders from the US, so why wouldn’t they also block Swiss a physician’s account under the threat of a withhold from the US Gov. FATCA may be under the guise of controlling Americans, but the big plan is to control the worlds money supply. Jefferson said that you don’t need an army if you can control finance.
Our politicians have lost control and the banks are loose canons.
@Heidi, I think the difference with the Swiss IGA to others, bit of a guess as I haven’t read the Canadian, UK, etc, is that the Swiss banks have to report American accounts going back to 2008 so even someone like me who renounced in 2013 will have their info passed on. So they’re checking clients for tax filings going back a few years to make sure they’re US tax compliant.
I haven’t heard of any ex-US accounts being blocked, only people who are still Americans.
http://www.englishforum.ch/finance-banking-taxation/200706-postfinace-demands-past-fbars.html
http://www.englishforum.ch/finance-banking-taxation/203243-my-kantonal-bank-asking-me-do-ovdp.html
@ Medea.
Since FATCA, some Swiss hospitals and their Dr’s do not trust the banks to protect their accounts against any claim from the US goverment.
“@George III, riddle me this.
A British Citizen with clinging US nationality is a permanent resident in Canada.
His/her permanent residency is based on their British Citizenship and they enter and leave on a UK Passport.
Will the CRA help collect against that person?”
9.29 If a financial institution wants to provide more instructions in connection with the question of where the individual resides for tax purposes, it may explain that a U.S. citizen is, in all cases, a U.S. person even if that individual also resides in Canada or another country. Non-U.S. citizens may take into account the application of any relevant tax convention in answering the question of where they reside for tax purposes.”
page 103 of draft legislation
definition in Canada USA tax treaty
“1. For the purposes of this Convention, the term “resident” of a Contracting State means any person that, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, citizenship, place of management, place of incorporation or any other criterion of a similar nature, but in the case of an estate or trust, only to the extent that income derived by the estate or trust is liable to tax in that State, either in its hands or in the hands of its beneficiaries. For the purposes of this paragraph, an individual who is not a resident of Canada under this paragraph and who is a United States citizen or an alien admitted to the United States for permanent residence (a “green card” holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States, and that individual’s personal and economic relations are closer to the United States than to any third State. The term “resident” of a Contracting State is understood to include:”
http://www.fin.gc.ca/treaties-conventions/USA_-eng.asp
KalC can you please book mark this stuff I really do not want to be here.
It depend on Great Britain USA Tax treaty. I am not going to look it up.
Remember it was the Liberals government of 1995 who approved CRA collection when almost not other country approved it. Can someone confirm that the Conservative say they will only collect on USA source income from non Canadians? Has the Liberal made any comments on this. Remember that party in opposition can oppose stuff they would support if they are in power,
KalC can you please book mark this stuff I really do not want to be here.
George says
May 28, 2014 at 5:16 pm
@George III, riddle me this.
A British Citizen with clinging US nationality is a permanent resident in Canada.
His/her permanent residency is based on their British Citizenship and they enter and leave on a UK Passport.
Will the CRA help collect against that person?
It depend on how UK USA tax treaty treats you. I am not going to look it up. I showed the Canadian USA tax treaty definition above.
For people who were wondering about tax treaty
Canadian FATCA no withholding on US income.
Canadian FATCA no closing downs pre July 2014 accounts.
For people who were wondering about Canadian FATCA
Canadian FATCA no withholding on US income.
Canadian FATCA no closing downs pre July 2014 recalictrant accounts.
Petros I have asked you before about holding provincial bond and shares certificates. This would apply to non traders, Computershares Canada is the company that distributes dividends and interest. What does the lawyers say about Computershares Canada? It is a 100 subsidiary of Computershares USA. If you call them up you hear that they say they keep all records in USA.
I was just wondering the details behind this expression I often hear used here on the Brock site, that is “an institution with a local client base.” How is this defined, and where in Canada’s FATCA capitulation agreement does this expression appear? Are we implying that credit unions are safe?
Thanks
@PierraD
Annex II, Section III (page 40 of 47): http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
Not all credit unions qualify. Three days ago, I wrote to 8 credit unions (that offer high-interest savings and are available Canada-wide) asking if they are deemed-compliant due to having a local client base. I have 3 replies so far.
The one affirmative reply I received so far is from Implicity Financial. So, there is at least one. Canadian Direct Financial and People’s Trust do not qualify.
I’m surprised more people aren’t excited about this exclusion. There is no dollar limit for the institution or individual accounts as far as I can tell.
Hey, thanks for the response What Am I. I went to the relevant page, and read it 3 times over and I still don’t get it. Is there someone more fluent in this kind of babble who could translate this for me (and others)?
WhatAmI,
In all of the research you’ve done, did you learn about how Alberta Treasury Branches will handle FATCA? Thanks.
@Charl
When you say that your bank adviser knows your history, I assume that you mean that he knows that you were born in the US, even though this is not in the bank’s database. If I was in your situation I would not be comfortable with this, no matter how friendly the relationship with him appears to be.
Personally I would move the account to another bank or credit union where no one knows anything about you. Any bank employee, no matter how sympathetic and friendly they may be to a “US Person” that they know about, will be caught in an ethical dilemma between the responsibility to follow their company’s directives vs protecting someone from injustice. It cannot be predicted how any given person will resolve this dilemma. At the very least I would ask him what he is planning to do about the knowledge that he has about you.
I know that it is a hassle to move accounts, especially if stocks have to be sold etc. but it may be well worth the trouble. You don’t want your account info sent to the IRS, even if by the time they get it the account has been closed. Now they know about you and how much money you had etc. You have this month to move the account before the official reporting of account info is supposed to start on July 1, as you know.