Liberal Party of Canada Anti-FATCA/IGA Statements

Good news for attempts to reach out to the Liberals about repealing the FATCA IGA – if the cabinet predictions below from the Toronto Star opinion piece today are true (see ‘How Justin Trudeau picked his new cabinet’ Toronto Star, Bob Hepburn Sun Nov 01 2015) in that those two MPs are familiar with the issues that FATCA (and US extraterritorial CBT) raise for Canadians. MP Brison submitted Parliamentary questions re FATCA ( http://www.canadianbusiness.com/blogs-and-comment/ted-hsu-and-scott-brison-have-questions-about-the-coming-u-s-foreign-account-crackdown-good-questions/ ) and very ably raised many issues during the Bill C-31 Finance Committee hearings re the FATCA IGA enabling legislation ( https://openparliament.ca/search/?q=Party:+%22Liberal%22+fatca+Person:+%22Scott+Brison%22 ).

“……Ralph Goodale, a veteran Saskatchewan MP and former cabinet minister, is expected to be announced as deputy prime minister and House leader.

Scott Brison is expected to become finance minister. Brison is a Nova Scotia MP and former cabinet minister who was the Liberal finance critic in the last parliament and is the party’s main spokesman on economic issues….”
http://www.thestar.com/opinion/commentary/2015/11/01/how-justin-trudeau-picked-his-new-cabinet-hepburn.html

Here is something that is not a statement of Liberal position, but shows that another Liberal MP was made aware of some of the FATCA issues very early on.

Came across this exchange while searching openparliament.ca for statements by Liberal MPs against FATCA. Shows that MP Szabo heard firsthand the CBA acknowledge that re FATCA;
“there are potential conflicts of laws–access to basic banking services, account opening requirements, privacy issues, withholding tax issues–all the complexities that are being created by the approach that has been taken to this issue by the U.S. Congress. And a number of other countries have raised and are raising the same issues.”

Standing Committee on Finance
NUMBER 063
l
3rd SESSION
l
40th PARLIAMENT
EVIDENCE
Thursday, March 10, 2011
http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=5040752
https://openparliament.ca/committees/finance/40-3/63/paul-szabo-15/

10:05 a.m.

Liberal
Paul Szabo Mississauga South, ON

“Let me move on, because on November 1, 2010, you wrote an *e-mail and copied Ms. Fung, and it had to do with a CBA submission regarding the IRS matter to do with this.

One of the things you recommended to the IRS in the information you transmitted was that a risk-based approach to accounts be used so that you would skew resources to the higher suspicious activities, etc., and cut off on the others. This report went on for dozens of pages.

10:10 a.m.

Director, Banking Operations, Canadian Bankers Association
Darren Hannah

Fourteen. I wrote it.

10:10 a.m.

Liberal
Paul Szabo Mississauga South, ON

You wrote it. You wrote 14 pages on tax evasion in the United States that states the position of the CBA to the IRS. Can you share with us the thinking on that? Because obviously it’s relevant to our situation, but we haven’t heard you mention this, and I’m curious as to why.

10:10 a.m.

Director, Banking Operations, Canadian Bankers Association
Darren Hannah

Point number one on it is that Canada and the U.S. have a very substantial information exchange agreement and tax treaty already in place, and we think that should be the conduit through which information should flow. Everything else that followed after that was in the instance that they simply did not go that way. A number of issues need to be resolved to try to be able to comply with this piece of legislation. And it talks in there at length about places where there are potential conflicts of laws–access to basic banking services, account opening requirements, privacy issues, withholding tax issues–all the complexities that are being created by the approach that has been taken to this issue by the U.S. Congress. And a number of other countries have raised and are raising the same issues.

And it’s because what they have done is try to bypass the exchange of information between authorities and go directly to foreign financial institutions, and that’s creating problems.

10:10 a.m.

Liberal
Paul Szabo Mississauga South, ON

Okay. ”

Read the whole exchange for context.

(On a side note, the specific *email referred to from the CBA to the IRS is available to read here in full; “Canadian Bankers Association 11/02/2010 General FATCA Issues” http://www.bsmlegal.com/PDFs/FATCA_CanBankers.pdf . The contents of the email referred to, and the 14 page report from the CBA Darly Hannah might be useful as it repeatedly refers to privacy, access to banking and other identified issues with FATCA – and cites specific references. Also the CBA notes problems with denying bank accounts is a problem with FATCA as applied to Ireland, Norway, and other parts of the EU who have similar legislation guaranteeing access to at least basic banking services. See CBA (and many other authored submissions in general to the IRS re FATCA) here http://www.bsmlegal.com/fatca-comments.asp )

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calgary411 says
October 31, 2015 at 9:09 pm

Finance Meeting, May 14, 2014, http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=6601885&Language=E&Mode=1

Hon. Scott Brison (Kings—Hants, Lib.):
Mr. Hannah, you’ve just described FATCA as enormously complex. This IGA is effectively a treaty between two governments. Should something so enormously complex be part of an omnibus bill with a couple of hours of study allocated to it?

Mr. Darren Hannah:

Well, it’s interesting. I’ve heard…. People have raised questions about the timing in all of this, and the process. From my perspective, actually, I view this as a relatively transparent and long process. The U.S. legislation came into place in 2010. The initial set of U.S. guidance came into place in 2010. The subsequent U.S. guidance came into place in 2011. The original model agreement, the original framework upon which the intergovernmental agreement was created—

Hon. Scott Brison:
Just to be clear, the ratification of this, in our Parliament—

Mr. Darren Hannah:
Right.

Hon. Scott Brison:
—is allocated a few hours of committee as part of an omnibus bill, for something you describe as enormously complex.
Mr. Kingston, you’ve said that the “overwhelming majority” of Canadians aren’t affected by this.
Mr. Hannah, you’ve said that the “vast majority” of Canadians aren’t affected by this.
How many Canadians do you estimate will be affected by this? Are you even aware of the number?

Mr. Darren Hannah:
No, I’m not aware of the number. It’s not going to be very many.

Hon. Scott Brison:
Really? A million?

Mr. Darren Hannah:
Well, be careful. First off, I don’t know if there are a million U.S. persons in Canada, but bear in mind, what is being reported—

Hon. Scott Brison:
Okay, but I would suggest…. Look, this IGA gets Canadian banks off the hook from reporting. It does not get Canadian citizens who happen to be considered American persons off the hook. That’s very important. You used the term “vast majority”.
Mr. Kingston, you used the term “overwhelming majority”.
What about the million Canadians who are affected? That’s the concern. None of us disagree with the idea of negotiating an IGA, but the reality is that you can negotiate a better IGA, given our relationship with the Americans.
Mr. Chrétien and Mr. Clinton had a remarkable relationship that enabled them to do deals that were not available to other countries. Mr. Reagan and Mr. Mulroney had an exceptional relationship. In fact, Mr. Reagan wasn’t exactly a big environmentalist, but he agreed to an acid rain treaty with Mulroney at that time. Relationships do matter.
We don’t quarrel with the idea of having an IGA, but we think there could have been a better IGA had we had stronger relationships in Washington.
Madam Bernier, in an earlier response to Mr. Rankin, you seemed to indicate there may be a concern regarding a potential charter challenge around the privacy issue. I want you to expand on that. Is there a potential charter challenge inherent in this?
Ms. Chantal Bernier:
I would urge you, in your studying of this bill, to ask for a demonstration of the necessity of the provision whereby an official out of the Canada Revenue Agency could provide to law enforcement authorities without a warrant information about a taxpayer on the basis of reasons to believe that perhaps there was criminal activity. That is exceptional and therefore should be buttressed by an empirical demonstration of necessity, and I would encourage you to seek it.

The Chair:
You have one minute.

Hon. Scott Brison:
Okay.
There’s an issue…. I’m just taking this from your testimony, Mr. Hannah.
For financial institutions, non-compliant would effectively mean that they would no longer be able to do business in “the U.S. capital markets or with any institutions that do business…”. Those were your words. Are our banks not significantly important to U.S. capital markets? Do they not, particularly post-financial crisis, carry significant weight within the U.S. capital markets and the oversight of the U.S. capital markets? Do we not have significant influence as a result of that?
(1600)

The Chair:
A brief response, please.

Mr. Darren Hannah:
Are we significant players? Yes. Are we significant enough players to get the U.S. to change its mind? No.

Hon. Scott Brison:
If they did what you were saying they would do, it would effectively compromise and shut down large parts of their capital markets. Do you really think they would do that?

Mr. Darren Hannah:
Well, let me answer it this way. There are 33 OECD countries and 30 of them have taken a look at the same math we’ve looked at and come to the conclusion that it is the best course of action to engage to get an intergovernmental agreement—

Hon. Scott Brison:
One of them is the global use of banking in Canada—

calgary411 says
October 31, 2015 at 8:07 pm

Questions from the Liberals: many, many unanswered: http://isaacbrocksociety.ca/wp-content/uploads/2013/10/Canadian-Parliament-FATCA-Questions-121-and-127-Oct-2528-2013.pdf

Liberal commentary take from: https://openparliament.ca/bills/41-2/C-31/?tab=mentions&singlepage=1, Bill C-31 (Historical)

Scott Brison:

There has been a lot of discussion on FATCA. Members of the business community are not the only ones who are being squeezed by Bill C-31. Canada-U.S. dual citizens are left out in the cold. The minister and even some finance officials could not actually answer the question of how many Canadians would be affected. The reality is that it is about a million Canadians who are caught in this dragnet.

Bill C-31 includes the intergovernmental agreement, or the IGA with the U.S., to implement FATCA. This should not be in a budget bill; it should be before the justice committee. There are strong foreign policy implications and issues of extraterritoriality. The agreement reached by the government is flawed. There are a lot of Canadians living in Canada with a connection to the U.S. They do not even know they are considered by the IRS to be taxable as Americans, in many cases.
The list includes persons born in the U.S. or born to an American parent, even if they have never lived in the U.S. While there are some exemptions for Canadian banks in terms of reporting, there are no exemptions for the Canadian citizens who happen to, in some cases almost by accident, be considered American taxpayers under this legislation.

One of the concerns that we have is that registered programs, for instance registered disability savings plans and registered education savings plans, these types of programs into which the Canadian government contributes matching grants to the investments made by Canadian citizens and taxpayers, those matching grants, we were told at committee and it was confirmed, will actually be considered taxable income by the IRS.

The intention, of course, of those matching grants by the Canadian taxpayer is to help young Canadians get an education or to help disabled Canadians benefit. It is not to effectively subsidize the U.S. Treasury.

These are some of the challenges in this legislation. Unfortunately with an omnibus bill, we have not been given the opportunity as parliamentarians to do our jobs properly and, at the appropriate committee, to scrutinize this massive, complex and unwieldy omnibus legislation by the Conservative government.

*********
Mr. Speaker, I have a question on Part 5 of Bill C-31, specifically on the issue of FATCA and its application to registered savings plans, RRSPs, registered education savings plans, and registered disability savings plans. Those plans have matching grants provided by the Government of Canada, funded by the taxpayers of Canada, that are intended to go to people with disabilities or to young people to save for their educations. Under FATCA, earnings from those deposits made by the Canadian government would be taxable by the IRS.

Does the Minister of State (Finance) believe that this would be consistent with the intentions of those programs and that it would be appropriate for the Canadian taxpayer to be funnelling money to the IRS and the U.S. treasury?

Second, has the government calculated how much money would be going to the IRS from the Canadian treasury as a result of FATCA and the provisions of this bill?
**********
The bill also includes new rules around FATCA, the U.S. Foreign Account Tax Compliance Act. Under the bill, Canadians effectively are going to be doing the dirty work and becoming tax collectors for the IRS. Canada-U.S. dual citizens are going to be punished if they do not provide their U.S. tax number to the CRA.

If these Canadians provide their U.S. tax numbers, the Canadian government will hand over all this information, together with information on the Canadians’ bank accounts, to the U.S. This will help the U.S. collect tax on registered Canadian savings accounts, including RDSPs, registered disability savings plans; RESPs, registered education savings plans; and tax free savings accounts.

The other night when we were at the briefing by the Finance Canada public servants, they could not answer a very simple question, and that was whether the contributions made to RDSPs and RESPs by the Canadian government as matching grants would be considered taxable by the Americans. They could not answer that basic question.

It was never the public policy intention of RDSPs and RESPs to subsidize the American treasury. They are for helping Canadian families with members with disabilities and for helping young Canadians get good educations. Yet the Conservatives are incapable of answering that question. They have not stood up for Canadian interests during these negotiations.
**************
I would like to speak again about something in this budget implementation act, and these are the measures regarding FATCA. The Conservatives want to actually turn Canadians into American tax collectors through this budget implementation bill. Earlier this year, when the Conservatives signed an intergovernmental agreement with the U.S. to implement FATCA, we had hoped that some of the concerns we had would be addressed.

Canada and the U.S. had previously achieved an agreement to exchange information on suspected tax cheats, but FATCA goes a step further than any other tax-sharing legislation has. It requires Canadian banks to give the CRA the account information of every U.S. citizen living in Canada. The CRA will then give this information to the IRS, and those U.S. persons will have to file taxes in the U.S.

The problem is that there are many U.S. citizens living in Canada, and they do not even know that they are considered Americans for tax purposes. These include any person born in the U.S. or born to an American parent, even if they have not lived in the U.S. since they were toddlers. The Canadian government has agreed to help the IRS find these individuals.
This will also affect Canadians who are not even U.S. citizens but are married to one, because their joint accounts will now be reported to the IRS. This is a remarkable breach of Canadians’ privacy by their own government. Not only will the CRA provide the IRS information with tax identification information and the account balances of U.S. persons without their knowledge, it will impose a $100 penalty for each instance of non-compliance. Why are Conservatives prepared to do Uncle Sam’s work in this case and potentially penalize Canadians with dual citizenship or their Canadian spouses?
U.S. persons living in Canada would be required to report and pay taxes to the U.S. on their RDSPs and RESPs. These accounts are supposed to help Canadians pay for education or help disabled Canadians avoid poverty. The Canadian government money was not intended to be used to subsidize the U.S. treasury. Why are the Conservatives allowing this to happen, when it so clearly is inconsistent with the objectives of RDSPs and RESPs?

The other night, as I mentioned earlier today, we asked the public servants at the briefing whether Canadian government contributions, the matching grants to RESPs and RDSPs, would be considered taxable by the Americans, by the IRS. They could not answer the question. The idea that we would sign an agreement when we do not know something as basic as this speaks to the way the government has lost influence, power, and authority in negotiating with the Americans.

The FATCA agreement is very important, and it should be a stand-alone piece of legislation. We should be doing a more thorough evaluation of the agreement the government has signed, and it should not be part of a budget implementation bill, an omnibus bill. Constitutional law experts such as Peter Hogg have raised concerns about whether the agreement violates the Canadian Charter of Rights and Freedoms. There are real issues around this that will be given short shrift through the process by which a budget implementation act, which is such a massive omnibus bill, has been given to Parliament.

Marc Garneau:

Mr. Speaker, my question relates to part 5 of Bill C-31. The government says it is doing a lot for Canadians. There is a significant number of Canadians who happen to be dual nationals who are not getting very much out of this, in fact, they are being abandoned, because the government is caving in to American pressure and, as my hon. colleague said, it is doing the tax collecting for the IRS. Banks in Canada would have to report to the CRA about client information for those who happen to be dual nationals. That would then be passed on to the IRS.
In finance committee, when officials were asked what kind of information would be passed on to the IRS, they could not answer, which means the government does not know either.
This is an attack on our privacy. I would like to hear my colleague on this.
**********

Switching over to something that is international in scope, the Canada-United States enhanced tax information exchange agreement implementation act, which we tend to call FATCA, is in the budget implementation bill, Bill C-31, at this point.
I would like to ask a question. Of course, it deals with the fact that we are going to be helping the United States, specifically the Internal Revenue Service, with information so that they can collect taxes from close to one million dual nationals in this country, I believe, who happen to be Canadian and American. This will very clearly involve Canada spending quite a bit of money to accomplish this, whether it’s in the financial institutions themselves or through the CRA.
I would like to ask you, Minister Baird, why it is that Canada is accepting to do this at the cost of hundreds of millions of dollars. What is in it for Canada to help in this particular case—and possibly there may even be privacy issues—to help the United States Internal Revenue Service collect tax from Canadians with dual citizenship?

And a bonus – I’ve never seen it before, from Elizabeth May, who echoes what so many of us said about what was happening decades ago when we came to Canada and became Canadian citizens:

Elizabeth May:

As I say, it is poignant and bittersweet to pursue in adjournment proceedings at 12:15 a.m. the matter of the constitutionality of something that many Canadians have probably never heard of: the Foreign Account Tax Compliance Act, otherwise called FATCA, which is buried in Bill C-31, the current omnibus budget bill.

What this Foreign Account Tax Compliance Act does is this. We know that sometimes we call the United States “Uncle Sam”. In this instance, Canada bent over until we said “uncle”, and that is on the matter of the U.S. doing something quite extraordinary. It has passed a domestic law and insisted that the rest of the world bow down and allow a U.S. law to apply extraterritorially all around the world.

As a former U.S. citizen myself, I find it ironic. When my family first moved to Canada, it was very clear that going to Canada and becoming Canadian citizens was something to which the U.S. government said, “Okay, forget it now; you cannot come back here and pretend you are Americans. We know you are Canadian now; no coming back here”. The laws were very clear that we were not U.S. citizens anymore. That was fine with me, because I was Canadian and that was all I wanted to be.

Now that the U.S. seems to find itself a little short of money, it is almost like people going around and trying to lift up the sofa cushions and reach for loose change under the seats where they had not looked before, in case they might find some money. Maybe a more appropriate visible image is of grabbing people who have any connection to the United States by their ankles and shaking them upside down to see if any loose coins fall out of their pockets.

The reality of this is that we have, under the Foreign Account Tax Compliance Act, acceded to the United States as if we were subject to a binding treaty with it, something called the “intergovernmental agreement”. In point of fact, the U.S. Congress has not ratified this so-called treaty, so it should not be binding on Canada at all. On top of this, we know that no less a constitutional expert than Peter Hogg has advised the Government of Canada in his letter, which I obtained through access to information, that the provisions under this act “…are discriminatory in a way that would not withstand Charter scrutiny”.

In other words, we are being forced through an omnibus procedure and into committee tomorrow at clause by clause, and unless my amendments are accepted, we will once again have passed a piece of legislation that is discriminatory, treating Canadians of different classes in different ways, which offends section 15 of the Charter. We will have done that to accede to something that is not even accepted by the United States as a treaty, because it has not ratified it.

There is a solution to this, and this solution has come from many legal experts. We should remove this from Bill C-31.

(This likely duplicates some of what others have already found and posted.)

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Mr. A. says
October 31, 2015 at 5:38 pm

Similar to what EmBee posted (re. Scott Brison & Ted Hsu comments), the video of the House Finance Committee deliberations could be examined for all of Scott Brison’s comments.

I remember him saying that the government grants to RESP/RDSP’s are not supposed to end up in the US Treasury.

EmBee says
October 31, 2015 at 5:59 pm

@ Mr. A.
You remembered right …
https://openparliament.ca/committees/finance/41-2/34/scott-brison-1/?page=4

Scott Brison Kings—Hants, NS
We have concerns that earnings from RESPs, and RDSPs, and contributions made by the Canadian taxpayer to those accounts were not intended to go into the U.S. treasury. Those contributions from the Canadian government were supposed to help people get an education, help people with disabilities.

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EmBee says
October 31, 2015 at 5:16 pm

This looks like a good place to find contact information for Liberal MPs.
http://www.liberal.ca/mp/

EmBee says
October 31, 2015 at 4:18 pm

It’s hard to find much from Justin Trudeau re: FATCA. Below is a reply I got from him back in 2013. It doesn’t indicate that he rejected the notion of FATCA; only that he wanted “safeguards”.

Dear Mrs. [xxx],

Thank you very much for your email dated February 17th, 2013 regarding the Liberal Party`s stance on the Foreign Account Tax Compliance Act and the impact it has on Canadians.

While the prevention of tax evasion is an important objective, it is important that the government also stands up for those Canadians who are being unjustly caught up in complex, American tax rules.

It is important that the IRS communicate clearly with Canadians affected by FATCA to help avoid the heavy penalties that come with failure to comply with the act. As the legislation is written by America for Americans, it is important that we ensure that our own legislation is not being hindered by these agreements. With regards to the taxation of deferred saving vehicles such as RESPs and RRSPs, as well as the taxation of Tax Free Savings Accounts, we must ensure that Canadians, who are using such programs legitimately, are protected accordingly. Canadians should not be punished for acting responsibly by saving for education and retirement.

Furthermore, it is important that any sharing of personal information between Canadian banks and the IRS only take place with substantial safeguards and oversight to protect Canadians` interests.

The Liberal Party of Canada has raised this issue in Question Period and will continue to press the Conservative government to protect Canadians.

Sincerely,
Justin P.J. Trudeau

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EmBee says
October 31, 2015 at 4:01 pm

Could this be a source of quotes for Scott Brison?
https://openparliament.ca/search/?q=MP%3A+%22scott-brison%22+FATCA
And here for Ted Hsu?
https://openparliament.ca/search/?q=MP%3A+%22ted-hsu%22+FATCA

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