Update: Blaze asked me to upload this letter from the Canadian Bankers Association to the United States (pdf) – Petros
Schubert and I wrote to Canadian Bankers Association two weeks ago concerning FATCA. We had a reply on Friday. CBA provided a copy of a comprehensive submission they made to IRS and Department of Treasury. They covered many of the issues we raised, but did not mention Canadian Charter of Rights and Freedoms:
Here is a pdf link to CBA’s submission. (I hope I’m posting this correctly so you can open it.)
100519 – Signed CBA Comments to US on FATCA Provisions (1).pdf
Here is CBA’s reply to Schubert and me:
Thank you for your e-mail. We certainly understand the concerns that you and your friend have with FATCA. However, you seem to be under the impression that Canadian banks are planning to willingly go along with the FATCA requirements and this is certainly not the case. In fact, the Canadian banking industry agrees with your concerns and we have been and will continue to fight to change the extraterritorial reach of FATCA and lessen the impact it will have on Canadian banks and their customers.We have information on our stance on FATCA and information for customers at the following links (here and here).Over the past two years, the CBA and the Canadian banks have raised our concerns with the IRS and the US Treasury Department and have also done so through our membership in the International Banking Federation. I have attached some of those letters for your review. We have also had discussions in Washington with IRS and US Treasury officials and Canadian Embassy officials. In Ottawa, we have raised concerns with officials from the Department of Finance, the Minister of Finance and the US Embassy. Finance Minister Jim Flaherty has supported our position and expressed his own concerns publicly and we appreciate the support from the Minister and his officials. And we are not alone in fighting this legislation. Governments and banking groups from around the world share your concerns and ours. You can find more documents here (http://www.deloitte.com).Draft FATCA regulations were released on February 8 and we are currently reviewing them with our members and will again make our views known to US officials as part of their consultations on the draft regulations. We are pleased the US Treasury Department has indicated that it is ready and willing to look at alternative paths to achieving the policy objectives of FATCA so we will continue to push for changes.I would like to address a few of the other points you and your friend raise in your letters. You are correct in stating that Canadian banks currently have no requirements, nor desire, to identify the citizenship of their customers. If they were required to identify US persons under FATCA, they would not be doing this willingly. However, they may have no choice as FATCA is currently written because the non-compliance would have a much larger impact on more of the financial institutions’ customers. The penalty for being unable to comply with these complex rules is very severe for both banks and their clients. The penalty includes a 30 per cent withholding tax on all U.S. source income flowing to the bank and its customers, and a 30 per cent withholding tax on the gross proceeds of the sale of U.S. securities by the bank and its customers. According to Statistics Canada, as of 2010 Canadian direct investment in the United States totalled nearly $250 billion.Finally, you have said that your credit union has taken a “Canadian nationalist stance” on this issue and will not be complying with FATCA. While it is free to make that choice, such a decision comes with considerable consequences for its clients. Any U.S.-source income paid to clients of the credit union from mutual funds or other investments will be subject to a 30 per cent withholding tax as will the proceeds from the sale of any such investments. If your credit union does not offer such services (for example, if the only services it provides are domestic deposit-taking and lending) then it may be able to make that choice without consequence because neither the credit union nor its customers have US earning. You might be best to clarify the situation with your credit union.I hope this information is helpful in explaining why Canadian banks would comply, however reluctantly, with FATCA if it became necessary and why Canada’s banking industry, with the support of the federal government, will continue to fight for changes to the FATCA legislation. If you have any questions, please let me know.Sincerely,
Maura Drew-Lytle | Director, Media Relations and Communications | Directrice, Relations avec les médias et Communications
post originally published March 4, 2012
fantastic idea @blaze, I knew that Susan Eng was talented and tenacious, but not that she is also a lawyer and – in taxation. Bonus for all of the ‘Canadian Grandmas/Grandpas’ – since she’ll understand the issues…..maybe all the Canadian Brockers should join CARP and start a lobbying block re the IRS threat to seniors, their estates, and their children and grandkids…..
Great Idea. I just joined!
If anyone else is interested, you don’t have to be retired or a senior to join CARP. You just have to be 50 or over. Here’s a link to their website. http://www.carp.ca/
Susan Eng is quite a firebrand. This may be a keen move on our part. I’m going to wait a week or two and then send her an email!
All reactionaries are paper tigers. In appearance, the reactionaries are terrifying, but in reality, they are not so powerful. From a long-term point of view, it is not the reactionaries but the people who are powerful.
Oldie but a goody!
6:36 AM on September 20, 2011
My aunt was born in US, but lived in Canada as a Canadian citizen most of her 60+ years. She was scared of being arrested by American agents or losing much of her retirement savings to this US cash grab. I made it my research project and read case law, the tax treaty, and reports from international tax firms. I learned:
– US has no power in Canada to collect taxes, take wages, or seize Canadian bank accounts. These are “extra-jurisdictional” tax claims, very difficult to collect, and our courts favored Canadian defendants.
– in 2006, less than 40,000 US people in Canada filed US tax returns. In 2006 there were maybe 600,000 of them here.
– Under Tax Treaty, Canada Revenue cannot collect US tax from Canadian citizens born in US, unless the claim was from before they became a citizens. And CRA told Don Cayo at Vancouver Sun they would not collect any US bank reporting penalties.
– My aunt’s bank has no record of her US birth. Treating a Canadian bank customer differently because they were born in the US is discriminating based upon “nationality or origin”. This violates our Charter and Human Rights law. Sending customer bank records to a foreign state, or closing an account because of where they were born, is discriminatory.
It’s sad that the US – 14 trillion in debt and borrowing money madly to keep the lights on – wants part of my aunt’s life savings. They can’t tax billionaires and GE, so now they want her money! Sadly, she will never vacation or visit the US again. Considering all the guns and how things are falling apart there that’s OK with me 🙂
Last one for tonight
This is not probably the best case to be associated with as it is basically about a real Canadian tax cheat however, it is interesting that charter considerations are being made in court in reference to information sharing provision under Double Taxation Treaties.
While I am not exactly thrilled with the prospect of the above mentioned person winning his case against CRA if he does it will make FATCA compliance that much more difficult under the Charter of Rights and Freedoms. (In the sense that Tax Treaties Canada signs with other countries such as the US must be Charter compliant).
@all, I found a lot of useful information here (it’s quite detailed). Excerpt: WHAT IS A WITHHOLDABLE PAYMENT?
An FFI’s withholding obligations (discussed above) apply to withholdable payments. Withholdable payments are:
U.S. source fixed or determinable annual or periodical income (FDAP), such as interest and dividends;
Gross proceeds from the sale or disposition (in a taxable transaction) of any property that produces U.S. source interest or dividends.
The proposed regulations exclude many types of U.S. source FDAP from the definition of withholdable payments, including:
Interest or original issue discount on short-term obligations;
Income that is effectively connected to a U.S. trade or business; and
Payments made in the ordinary course of business (including interest on payables from the acquisition of nonfinancial services or goods).
…only the full compliance date has been extended to January 2014, hasn’t it?
You may note (and add comments) that this self-righteous lawyer has not responded to Joe Link’s scenario of other nations instituting their own FACTA’s
“But FATCA could also prove to be a marketing boon for Canadian financial institutions that don’t operate in the U.S., and an incentive for marginal players to exit the U.S. market.”
Again, I reiterate, there will be many opportunities to remain proudly and safely Canadian.
@joe, someone get a fire extinguisher over there!
Here’s another one of those FATCA submissions:
“The Canadian financial services sector:………” This submission has been prepared jointly by the Canadian Bankers Association, the Canadian Life and Health Insurance Association, the Investment Funds Institute of Canada, and the Investment Industry Association of Canada (descriptions of each association are included in Appendix A). ”
“We would also like to acknowledge at the outset the value of the proposed “intergovernmental approach” that Treasury is exploring with several countries that would see FATCA reporting on a tax authority-to-tax authority basis. This is a welcome development and we encourage Treasury to undertake similar processes with other countries, including Canada. In addition, we underscore the need for a global approach to FATCA that minimizes differences in compliance for global FFIs that will be operating in various “FATCA partner” countries with different bilateral intergovernmental agreements (IGAs) as well as in “non-FATCA partner” countries without IGAs. Our comments on the Proposed Regulations are not premised on the existence of any IGAs but rather reflect the changes that we believe are necessary or desirable for the implementation of FATCA. ”
Apologies if this is posted in another thread.
If I read that right then those b-turds are throwing Canadians under the bus. The words “reporting on a tax authority-to-tax authority basis” are downright chilling. The words “we underscore the need for a global approach to FATCA” reinforce Just Me’s contention, which I share, that FATCA is the first step to GATCA.
@Em, they go where they see their global interests lie, with no regard for allegiance to a higher national interest or sovereignty.
“Welcome to iiac.ca, the website for the Investment Industry Association of Canada (IIAC).
IIAC is a member-based professional association with 180 members representing a majority of IIROC registered organizations (IIROC is the national self regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada).
IIAC advances the growth and development of the Canadian investment industry, acting as a strong, proactive voice to represent the interests of our members and the investing public.”
(regarding the above mission statement – WHERE IS THE so-called ‘INTEREST’ OF THE “INVESTING PUBLIC” in all this???)
Foreign Account Tax Compliance Act (FATCA) Compliance Solutions Conference
Date: May 30-31, 2012
Location: ONE KING WEST, Toronto, Ontario
The Canadian Institute’s FATCA Compliance Solutions conference will offer advice and strategies foreign financial institutions (FFIs) need to transition into FATCA compliance.
Identifying practical implementation strategies for FFIs with global operations
Coordinating your existing AML/KYC procedures with FATCA regulatory requirements
Complying with IRS and Treasury Regulations and Guidance: Critical strategies for identifying U.S. accounts
Analyzing passthru payments and FATCA’s impact on securities and investment banking
This program will feature speakers from a variety of different professions, including tax professionals, compliance officers, operations and IT, in-house counsel and internal auditors. IIAC’s Andrea Taylor will be co-chairing the program along with John Staples, Partner at Burt Staples & Maner LLP.
For more information or to register, please click here.
IIAC Members are eligible for a discount. Please contact Katherine Tiller (email@example.com) for more information
If you want to see if you’re involved with one of the IIAC members – check this list:
So, I’m sticking with my credit union.
The following comments did not make the transfer from isaacbrocksociety.com:
For the record, I am inputting the
Canadian Bankers Association testimony at the May 15th FATCA public
Hearing. I chose this thread as it seemed to have the most discussion
regarding their position. This so you can see what was said publicly
and see if it provides any reassurance as to how strong they will be in a
push back to FATCA. You be the judge.
Also, I am adding the testimony of the TD Bank Group, a worldwide financial services group headquartered in Toronto, Canada.
Good work on finding this. Nothing unexpected they are basically
saying what they have to will stressing there continue to be huge legal
conflicts. What is more important and interesting is the head of the
Canadian Bankers Association Terry Campbell is starting to talk
publically about FATCA in front of Canadian audiences in a not so
@justme, TD Bank: ” How do you
satisfy Canada’s strong comprehensive and internationally allotted
domestic regulatory environment while facing U.S.-based requirements
under FATCA, all while working hard to keep customers happy?” I read
this a shot against the US’s handling of its financial affairs and how
the customer is important to Canadian banks (maybe they realize that
when a customer is unhappy, their dollars also walk out the door?) As
far as Canadian law goes, the Treasury has already stated that some
countries may have to change their laws to implement FATCA, leaving it
up to each country to work out the details. In light of the negative
response to DATCA, is reciprocity one way of helping derail of the FATCA
@JustMe: Thanks! It doesn’t
exactly instill confidence that Canadian banks care about legal rights
of customers, does it? Most of the focus seems to be on how difficult
and costly implementation and administration will be to the banks.
@Bubblebustin: That exact same sentence jumped out at me. “Keep
customers happy?!?” It sounds like he thinks we are kids throwing a
temper tantrum. Why wasn’t the focus on ensuring we are protecting our
customers legal banking, privacy and human rights. I personally found
reference to Canadian laws to be superficial and weak.
It also seems CBA is promoting government to government exchange of
information. If a recent article in Globe and Mail was accurate, the
government may be attempting to negotiate that. This again could make
“US persons” in Canada second-class Canadian citizens and residents. No
other group of Canadians has information about their financial assets
submitted by to Canadian government for submission to a foreign
Through the tax treaty this information on income from assets
invested in one country while living in the other is already exchanged
between US and Canadian governments. So, why negotiate anything
In one letter and four e-mails, I have advised Mr. Flaherty he needs
to tell Canadian banks they must adhere to Canadian law. Plus, he needs
to assure Canadians that Canadian law .will not be changed to
accommodate a foreign government. Until he does that, I worry that we
may all be vulnerable to losing our rights to managing our assets and
finances in privacy and with confidence with our Canadian financial
So far, nothing from CBA, TD or the government assures me that they will not capitulate to FATCA
I think for a long time all of the involved parties on the Canadian
side have wanted some type of “mutually beneficial” agreement with the
US. This is simply following the pattern of US Dominion relations since
the War of 1812(Webster Ashburton Treaty, Treat of Washington, Boundary
Waters Agreement etc).. The problem is in this particular dispute is I
can’t figure what exactly a mutual beneficially agreement would even
be(and not to embellish but many people think I am really smart person)
and I have a feeling Flaherty’s staff can’t figure that out either.
Repealing Citizenship taxation is actually as much of a solution to
FATCA as repealing FATCA itself.
@Tim, citizenship based taxation is the sacred cow that needs to be slaughtered!
@Tim: I think you’re a really smart
person, too. I always look forward to your input. I cringe to think
what a “mutually beneficial” agreement will be. I don’t think I’m
reassured that even Flaherty’s staff don’t know what that could mean.
Plus, Steven Mopsick tells us Washington is run by highly educated,
intelligent, moral, caring, people and they give us citizenship-based
taxation, HIRE, FATCA, FBAR, OVDP, Ex-PATRIOT, etc. etc.
Where is Steven anyway? Steven was ticked off at Michael Miller in
the Quiet Disclosure thread when Michael called him an “outlier” a
couple of weeks ago. Steven said “We’re done” and I think that’s the
last we heard from him.
Come back Steven, don’t lawyers disagree all the time? You can take it, can’t you?
Flaherty’s people to be fair are
“smarter” in my opinion than the people in the US Treasury. I linked to a
video below so you can see for yourself who Flaherty’s people are. One
thing that is a bit shocking is how young they are like the woman in
charge of Federal Gas Taxes.
The video below gets more interesting towards the end:
Here is the way I describe tax policy there are two types of taxes as
I call them Academic and Political. Academic taxes are those created by
the “best and the brightest” whether they be in Ottawa, Washington DC,
or Wellington, NZ. Examples of Academic Taxes are the Canadian GST/HST,
much of the modern Canadian Income Tax System, US FATCA, US HEART or the
Mark to Market US Exit Tax(Modeled essentially on the Canadian exit
tax). Political Taxes are those created by politicians to serve
political purposed first and revenue raising purposes second. Examples
of these would be Citizenship based taxation in the US(a US civil war
policy completely at odds with the rest of the world), much of the US
internal revenue code, the Estate Tax(eliminated in Canada in the 1970s
in favor of deemed disposition on death), the old Canadian Manufactures
Sales Tax, and the old Ontario Provincial Sales Tax. Overall Canada has
more “academic” taxes thus making the best and brightest in Ottawa even
better and brighter than in DC. For example the GST, a creation of the
best of brightest in Ottawa has a lot of provision that raise very
little revenue but make the tax more “academically” “pure”. Charging GST
on supplies to embassies and consulates who can get the tax they paid
refunded from CRA after the fact is an example.
@academic v political taxes, you offer a great perspective on the difference. One is thought out, the other often knee jerk.
My sense is Flaherty’s idea of a mutually beneficial agreement would
be an “expansion” of the existing automatic information sharing
agreement between Canada and the US that is completely reciprocal and
centered around residency not citizenship. The problem is from a
legislative perspective on the US side the existing information sharing
arrangements are irrelevant. I am sure Canada wouldn’t mind the US
sharing more information on Canadian tax residents with assets in the US
but that is irrelevant from the perspective of FATCA. I would tend to
doubt that the IRS even has the legal authority to force US financial
institutions to collect additional information from Canadian tax
residents beyond what they already do. FATCA was drafted to be
completely unilateral and one sided basically in terms of reciprocity.
@Tim: I like to think “our” people
are smarter than “their” people (although some of the policies and
comments that come out of Ottawa and Toronto sometimes lead me to
Unfortunately, our “smart” people seem to be negotiating “mutually
beneficial” (without understanding what that means) with “intelligent”
people who are only interested in “American beneficial,” so I don’t know
where this will all end.
Do you have any sense of when we might have some definite statements about what the government thinks is “mutually beneficial.”
Can you also tell me why it seems to be impossible for the Minister
of Finance or the Prime Minister to make two simple statements: 1.
Canadian banks must adhere to Canadian laws and 2. Canadian laws will
not be changed to accommodate a foreign government.
Those two statements seem to me to be a no-brainer. They would do
much to reassure many of us. Yet, our Ministers of Finance and the
Prime Minister won’t say them. Making those statements might also give
Canadian banks something to “take to the bank” in discussions with
@Tim: Thanks. It seems you posted the answer to my question just as I was posting the question.
Any input you can give on the second part about why it is so
difficult for the Finance Minister and PM to make two simple statements
would be appreciated.
@Blaze, I agree that those two
statements would go a long way, but then that involves making a clear
stand and for some reason (diplomacy, stall tactics, no cojones?) that
line in the sand isn’t being drawn. Yet. However, the above statement
from TD doesn’t sound like surrender to me and they’re adding to the
chorus that may just derail FATCA, if the US can be reasoned with on
this. The uncertainty is killing me too.
From what I seen several places that won’t be any official
communication out of Washington on FATCA until the of August at which
point they should be able to provide more details of the
I think Steven Mopsick is right to say that FATCA is ingenious in
many ways. It doesn’t contradict any tax treaty commitments of the
US(something Flaherty has admitted) and in theory gives institutions the
right to opt in or out with no hard feelings on the part of the US
government unlike some of other legislation coming from the likes of
Carl Levin that gets into blacklisting and sanctioning countries and
institutions. (My sense is Treasury say FATCA as preferable to the more
heavy handed ideal of blacklisting and sanctioning). As to my academic
vs political dichotomy FATCA is an academic tax vs Carl Levin’s Stop Tax
Haven Abuse Act which is more political and punitive. However, from a
political standpoint US Treasury has to take a strong line on FATCA to
avoid giving ammunition to likes of Levin who want to start drawing up
blacklists of “uncooperative” countries and things like that.
Another example of the academic vs political dichotomy is you have
seen a lot of former US Treasury and IRS officials who were involved in
developing the 2008 Heart Act Exit Tax(which the US Treasury wanted to
bring in way back in 1995 and is a copy of the Canadian Exit Tax see my
posting from last night on Paul Martin’s 2000 press release) coming out
critical of the Schumer Casey Ex-Patriot Act in favor of leaving the
expatriation law as it is. I also from doing some research have found
out the US Treasury and State Departments have tried to get the Reed
Amendment repealed on several occasions but were blocked by political
considerations(I found out that Bill Clinton and Larry Summers as US
Treasury Secretary made a big push to scrap the Reed Amendment in his
final year in office). So as much I don’t like the senior public service
of the US Government on many occasions I do think over time they can be
reasoned with. Its just Washington is much more “political” environment
I do also strongly believe a solution will be worked out for people such as yourself that have a strong claim of relinquishment.
@Tim: Thanks for your insight and
what often seems to be inside information. Another Brocker and I are
quite intrigued by your knowledge, comments, recommendations and what
often seems to be insider information.
I hope you’re right that something will be worked out for those of us
who have a strong claim to relinquishment. For Tiger and me, we have
obtained (Thanks to Schubert’s advice) copies of our citizenship oath,
which then included renouncing any other citizenship. USA can say what
they want about us being “US persons.” I don’t see how any Canadian
bank could not accept that as absolute proof that we’re not “US
Have you ever told us your situation? Are you what the US deems to be a “US person?’