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.
@Bubblebustin,
The CRA Guidance to the IGA is 158 pages long, but the IGA itself is only 47 pages. The IGA is not hard to understand, well, at least not now after reading it over for about a year…
I’m not going to comment on Mr Savin’s comments (a random law school student?). He even quoted the wrong section. He quoted “pre-existing” accounts but you’re asking about “new accounts” (after July 1, 2014). If you look again above, I quoted you the correct section for “new individual accounts”.
Let’s just read the IGA ourselves.
You want to know about self-certifying and new account opening? It’s right on page 27, and I think it’s clear that the self-certification is at the time of account _opening_:
Here are some corresponding details from the CRA Guidance, Page 106:
I would think that “…from an account holder who opens a new financial account that is required to be reviewed.” means not an RRSP, etc account, but ra eportable account such as chequing, savings and other investment accounts.
It says “The implementation of the Agreement in no way requires or encourages financial institutions to refuse to open an account or to otherwise deny service.”, but it doesn’t forbid a FI from denying service.
In summary, the FI has to determine the client’s US-person-ness at the time of new account opening. The FI decides if they want to use the $50K reporting exclusion, or not.
The business surrounding “pre-existing accounts” (open as of June 30, 2014) is not so clear to me. Specifically, if there is no hint of US indicia on record for existing accounts (under $1M), does the FI _ever_ _have_ to ask about an account holder’s US-person-ness? I haven’t gone looking for that answer, probably because I’m afraid to find out. I can’t sleep at night as it is.
If you read page 13 of the Savin paper, it’s clear that he thinks the IGAs are too weak, and he is concerned about the loopholes it contains. For example, a person can split up moeny between several FFIs to get under the $50K reporting threshold. There is at least one congressman or IRS person who expressed this concern as well.
I would not turn to these people to interpret anything for me. This makes me want to puke:
WhatAmI,
Puke is right.
… need to prevent U.S. citizens from evading (exceptional US citizenship-based) taxes and the FFIs thinking twice before taking the risk of 30% withholding penalty, with serious demand for the IRS to supervise from beginning to end …
May these exceptional U.S. people who criminalize regular folks in other countries who have residence-based taxation law and have understood only that all rot in hell — and our governments for allowing it for the sake of its banks (who have stepped over the US border) over its peoples.
Their paper seems mainly concerned with China. I found the statement that a U.S. court would probably not allow account data to be sent to China (I.e.reciprocity) to be the most interesting one in the whole paper. In that case, why on earth would China help the IRS?
Follow.
@WhatAmI, and calgary
re that extract from Savin:
What about the arrogant phrase, bemoaning how the poor poor IRS and America are so very very hard done by their extortive labours:
“.. the fact the FFIs report to their local government rather than to the IRS (as
required by FATCA), imposes serious demands on the IRS to supervise the reporting
process from the beginning to the end. …”
Supervising the process from beginning to end includes supervising our Canadian tax agency – whose FATCA services as an arm of the US Treasury is paid for by ALL Canadian taxpayers ( as we can see here in the recorded answers of Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency Rick Stewart http://openparliament.ca/committees/finance/41-2/63/rick-stewart-2/ ).
But I guess that’s ‘America’s burden’ eh? Like the ‘white man’s burden’ as used to rationalize colonialization and exploitation, the US is soooooo hard done by. Extorting FATCA foreign aid from the rest of the globe in the form of citizenship/parentage/birth-geography based taxation, and having all the taxpayers in the rest of the globe outside the US pay for the pleasure of servicing the US is such sweaty work for the US Treasury – the Might is Right approach – done the American way. But someone’s got to do it says the US Congress, Treasury and the IRS. Someone has to extract assets from the rest of the world based on flimsy pretexts and the threat of kneecapping.
Ah, badger, the generosity of the Canadian taxpayer knows no bounds …
The Canadian media and the Canadian public are not allowed to know what the compliancers and FATCAnatics know and discuss at this IFIC (Investment Funds Institute of Canada) FATCA event:
https://www.ific.ca/en/events/2015-fatca-reporting-and-beyond-the-funds-perspective/
See this warning on the registration page:
“Note: This event is closed to the media. Statements made during sessions and presentations, or in conversations with presenters, may not be quoted or attributed. ”
So, does this mean that though they would like you to invest your Canadian family funds with IFIC members, the media can’t let you know what the IFIC members and event participants know and discuss re FATCA?
@calgary,
yes, instead of assisting Canadians and Canada’s wellbeing via our own Canadian tax revenues, Harper has decreed that Canadian taxpayers must ALL provide the US Treasury with Canadian foreign aid via our Canadian tax revenues, funnelled through the CRA’s budget – expenditures made in direct service of the FATCA IGA – to US satisfaction.
Don’t get worked up by anything written by Savin. Or by Losin either.
The “legal essay” is one of the craziest little genres ever devised. Usually one cut below a Harlequin romance. As with any such text, the only value in it is whatever you can manage to extract and then to satisfy yourself independently that said extraction is not totally specious. At least the “legal essay” tends to append a collection of citations – often the only value going for the whole sad effort.
Follow
@Calgary411 @WhatAmI
I know what you mean about the sleep thing, WhatAmI.
“Section III of Annex I applies to new individual accounts and provides the procedures for identifying U.S. reportable accounts among accounts opened by individuals on or after Jul. 1, 2014. As with preexisting accounts, accounts below certain value thresholds do not have to be reviewed. However, if the account is above the threshold, the FFI must obtain a self-certification from the account holder regarding his or her U.S. person status and check such self-certification against the other documentation obtained in opening the account. If the self-certification shows that the account holder is a U.S. person, the account must be treated as a U.S. reportable account and the relevant information collected.”
https://tax.thomsonreuters.com/media-resources/news-media-resources/checkpoint-news/daily-newsstand/irs-answers-question-fatca-new-account-self-certification/
I appears to me that it’s left to the discretion of the bank whether account holders with opening account balances of less than $50K will be scrutinized. There has been quite a bit of discussion here about how it might be easier for the bank’s computer system just to include everyone, but little about what either decision would cost the bank’s in terms of resources and public relations. As bad as it is to be discriminated against as a new account opener, imagine how entrapped you’d feel if years later you’re dragged into your friendly bank manager’s office for what feels like an interrogation about your US personhood because a reportable account reached $50K?
Hopefully Gwen and Ginny’s lawsuit will make a moot point of all of this. Donate to ADCS today.
I don’t understand how the IRS can publish FAQ #10 saying that an account cannot be opened if the certification cannot be obtained. The Canadian IGA and the CRA Guidance document clearly state that the account can be opened, but becomes reportable.
The FAQ #10 even refers to Annex I, III, B, which I’ve quoted above showing that the account can be opened. See above where I also quoted 9.15 and 9.15 from the CRA Guidance.
The IGA states: “This Agreement may be amended by written mutual agreement of the Parties”. Did Canada agree to this change? WTF?
I suppose it doesn’t matter. If a FI insists we self-certify and we don’t have a CLN, we’re most likely to just leave and not open an account even if they allow it.
Until Canada decides that it’s going stand up to the US, it is going to go along with whatever the US dictates.
25Feb2015
‘Byrnes and Perryman’s Analysis of the FATCA GIIN Lists June 2014 – February 2015’
http://www.kluwertaxlawblog.com/blog/2015/02/25/byrnes-and-perrymans-analysis-of-the-fatca-giin-lists-june-2014-february-2015
For those interested in this type of analysis of FATCA GIIN ( Global Intermediary Identification Number ) registration figures and jurisdictions registered over time.
I’m going for compliance and am currently filling out the 6 years of NFFBAR forms. However — one of my accounts (which is a joint one held with my foreign spouse) is a One Account in which both of our salaries were paid and the mortgage was taken out. This means that each month there is usually very little in the account balance, but a lot in the deposits. Does the instruction to determine the maximum value of the account as “the greatest value of currency during the calendar year” mean that I should look at each month’s account balance or the money deposited?
@SylvanMoon
There is no tax or other consequence of the value you submit, so I would say to report the highest single-day balance for the year (probably after the paychecks are deposited and before the mortgage payment is taken out).
Thanks WhatAmI.
http://www.taxabletalk.com/2014/01/07/fbar-changes-for-2014/ (for one) seems to agree with you, WhatAmI.
I’m continuing this conversation, as per DukeOfDevon’s suggestion here, since it is not related to the fundraising post. Do others agree, that a transfer of US funds from the USA to a Canadian FFI would awaken the FATCA Cops at a Canadian FFI? Just recently, at one of my FFI’s (got so many nuts everywhere I cannot keep track these days), but this particular FFI was TD, I overheard a conversation between another client and a teller. It appeared the client was depositing a US cheque of a largish amount, and was being asked questions from the teller as to the source of the funds. I could only hear bits and pieces of the conversation so perhaps it was totally not a FATCA related inquisition, but eventually the client left to speak with the manager. It makes me wonder what sort of FATCA training tellers are getting, and what clients can expect in future from Canadian FFI’s should they ever have to transfer US assets to Canada.
WhiteKat,
Just what you said –may be questions asked?????
Duke,
Would questions be asked by a Canadian *foreign financial institution* when funds come from a US estate (inheritance) to a *hidden* US Person in Canada, as WhiteKat asked? Or, would that transfer just go into an existing account, no questions asked?
@Calgary re: “Or, would that transfer just go into an existing account, no questions asked? ” I am pretty sure that even pre-FATCA there would be questions asked.
ooops, hit enter before I finished that last comment. The ‘know your client’ approach has been around a long time, so I would imagine that anyone transferring a largish amount from US to Canada would be questioned to some degree, however now with FATCA the questioning will likely be designed to figure out whether or not the person owning the account that the funds are transferred into is a US person for tax purposes. For example, if the customer rep knows this is an inheritance, they may ask further probing questions, like “oh, so are you also from the USA?”
At which point, those of us who are OK with lying, will say something like, “Hell NO!” 🙂
@ WhiteKat
I agree that different banks, working along different timelines and guided by different FATCA IGA interpretations (I don’t think they really know what exactly they’re supposed to do at this stage) will indeed be questioning significant U.S. transfers. Maybe they have been doing that all along but I don’t know. I think this is a little warning to people to be very wary of U.S. investments because the hassle to get the money returned might not be worth the supposedly better earnings. Pity the Snowbird with a piece of U.S. real estate too. I imagine that could be quite a muddle when the property is sold, trying to satisfy capital gains regulations on both sides of the border.
A bank manager in the USA who my husband knows told him that electronic transfers to Canada are “difficult” and involve a fee but if a person has a U.S. chequing account (a Snowbird would likely have that) they can transfer money by writing a cheque without necessarily raising a red flag.