Top Priority: Canada seeks input into FATCA negotiations with US

298 thoughts on “Top Priority: Canada seeks input into FATCA negotiations with US”

1. @SwissPinoy

   Don’t feel alone.  This is definitely not my specialty, getting immersed into the technical and legal nuances of all the regulatory exemptions and loopholes. I do not have a legal mind or the detail inclinations to dig into all this junk, unless really pressed for my own survival. It gives me a BIG headache too.

   Governments have a structural inability to do anything simple, and with every rule ever written, there is a clever and legal way around the minefield they create. I am sure there is an army of legal experts pouring over the IGA annexs finding the best route for survival of their clients. 

   It is impossible for anyone in Government with power to design anything simple. It has to be Big and complex and to employed with as much force as possible to justify their existence when simple and very small would probably be physiologically better for a desired compliance result.  They absolutely DO NOT need a FATCA to improve tax revenues, but they can’t help themselves. It is how it works with those of this mindset. 

   
   

   and to your question “Not exempt to FBAR and double-taxation? ”

   No, that requirement on the U.S. Citizen still remains.

2. @Rose…

   I have no idea if Keating is even vaguely aware of FATCA.  I assume not.  

   Here is what a friend of mine told me about the discussion he had with his son about FATCA who heads up of a group of “quants” at a major Aussie Bank…

   Well I should have know there would be a very simple explanation as to why there’s not much interest here amongst the banks.

   You probably know all this, but here we have a government “Bank Regulator”  and they basically tell the banks what they have to do.

   This happens with such regularity that all the banks have “budgets” to meet such government requirements.

   They have been doing all sorts of things regarding client information ever since 9/11, so I guess it’s been a US push from the start.

   Privacy laws didn’t seem to come into it.

   As for cost of compliance that the bank wears, as I said already they have a budget for such contingencies, and in any case their argument was that it would take just as much to check and monitor customers nationality, as it would to just pass on the information.

   So much information is already gathered by the banks and past on to various authorities this would just be some more “forms” which wouldn’t be a problem!

   I think the long term consequences of having full global financial transparency escapes them.

   I think they see it a bit like “privacy laws”; if you haven’t done anything wrong, why the concern about privacy? 

   That might just about sum up what the attitude would be in the general population of the US, even if they became aware of what is going on.

   “I’ve got nothing to hide with my money, so I’m ok”

3. Any Canada-US IGA must conform to Canadian law, including the Personal Information Protection and Electronic Documents Act (PIPEDA), which prohibits institutions (e.g. banks) divulging personal information without the knowledge and consent of the individuals.

   A Canada-US agreement that does circumvent PIPEDA amounts to information laundering. If it were money, it would be called money laundering. And as such would undermine Canadian law, as it would signal that the Government of Canada would respect Canadian law only so long as it was convenient to do so.

   My opinion.

4. Pingback: How the term “US person” will give the US “de FATCA” control over other nations « Freedom from the tyranny of U.S. citizenship-based taxation for U.S. and dual citizens outside the U.S.

5. Pingback: The Isaac Brock Society - How the term “US person” will give the US “de FATCA” control over other nations

6. Reposted From John Brown 

   I posted this on another thread but perhaps here is a better place to put it.

   The Star Phoenix: “IRS pursues Americans living abroad”

   http://www.thestarphoenix.com/business/pursues+Americans+living+abroad/7608929/story.html

   It looks like the writer really did his homework on the topic. 

7. I wrote to Kennedy Stewart MP Burnaby-Douglas with our appeal attached. I didn’t hear back from  him but he’s been kind enough to invite me to his Christmas open house. I doubt I’ll go, but if you are in or near his riding perhaps he’ll lend an ear about the FATCA story-the gift that will keep on giving. 

   http://us4.campaign-archive2.com/?u=7bbddbc4931124b0190984cc7&id=edc11f0930&e=fa32da127a

8. Oh, I see that MP Peter Julian will be at that Christmas Open House.  He was at the FATCA meeting that MP Paul Dewar hosted in Ottawa last Spring.

   I found the following of interest in the Wikipedia article on Mr. Julian:

   “Julian was vocal opponent to the Security and Prosperity Partnership (SPP) that he believed threatened Canada‘s sovereignty through deep integration with the United States and Mexico. … Recently, Julian initiated an NDP task force that will meet and consult with diverse Canadian immigrant communities across the country, and to learn more about the challenges they face.”

9. @pacifica777

   Darn! I would suggest we meet there to discuss our challenges with these gentlemen, but we have out of town guests this weekend. A great opportunity lost for me 🙁 

10. @Just Me

    The article  is written by a Canadian investment advisor/banker.  Unfortunately  I can’t share your enthusiasm.   There is some suspect information,  which might not be apparent to non-canadians.

    For example  he refers to “special forms”  to shelter  TFSA’s  RESP’s etc from US taxes.  Now, there is a special form to shelter RRSP’s  but as far as I know,  that is it.  If there is something else I would love to hear about it.  If he is referring to the 3520 it is only a reporting form,  but doesn’t do a thing to shelter anything. 

    The
    situation gets more complicated concerning investment income earned in
    such Canadian tax-sheltered accounts as TFSAs, RESPs, RRSPs, RRIFs and
    defined contribution employer pension plans. Income earned in these
    accounts can only be sheltered from U.S. tax if the American investors
    include the proper forms with their U.S. income tax returns each year.

    Read more: http://www.thestarphoenix.com/business/pursues+Americans+living+abroad/7608929/story.html#ixzz2Dep597Ke

11. I found the author’s email address (terry.mcbride@raymondjames.ca) and forwarded some information, letting him know his story was not as accurate as it needed to be. I gave Terry McBride several links from Isaac Brock and the two recent ACA YouTube interviews and hope he will have a hear and look to learn further before giving advice. It is very important that people do not get the wrong advice.

    I just read this comment on the CBC article:

    This is not being truly reported on here. The only people who will now have to worry are the ones who have used the dual citizenship to advantage their taxes paid in total. If an American working here in Canada and claimed all of their income here and paid our taxes on this, thne there will not be any problem. It is only those who used this dual citizenship to avoid bothe Canadian and US taxes and setup shell companies in taxfree destinations, thta are going to get hit.

    My sisterinlaw is a dual American /Canadian citizen. She got all worrioied about this when she was told thta for the last 30 years she has been only filing her Canadian taxes and nevre filed a USA tax form. The accountant told her thta it was not a problem as she did pay the Canadian taxes on all of her income. So all he needed to do was file the US forms and showed the income and taxes that were paid for all the back years required and other then the account getting paid that was it. Since right now she spends 5.5 month in Florida and 6.5 months here in Canada, there is no problems and she will just file the US forms, as is her duty and she still pays only the Canadian taxes. This will be the same case for any and all who have been dutifully paying taxes to one or the other country.

    But many rich people take the money thay make here and claim they are not Canadian citizens and do nto pay taxes on it. They also do not pay any US taxes as they made no money there. They then usually make sure the money is put off shore so the banks can nto show the discrepancy and they avoid all taxes. Those are the ones that this will go after and yes I believe thta the Banks in Canada must show the transfers and all the things about this money to the Revenue people. I do not care if they get caught.

    So much mis-information out there, along with the painting of us as tax evaders, etc. / end of story. It is so disheartening.

12. @calgary411

    I hope someone set him and his sister-in-law straight.  Sounds like bad accountant advice.  But then that would be the same guy that told her she didn’t need to file anyway. 🙂 

    mvh

13. @Just Me,

    As you so often do, it was Recalcitrant to the task this time. Will they listen? Sadly, not likely and there will be a big mess to clean up there coming one day. I just didn’t know where to start that would be the least comprehensible. (Besides, my real name shows up on comments to CBC — and some of mine never see the light of day.)

14. @Calgary411

    You made me go look up what he had to say in response.  Thought I might as well post it too…

    http://www.cbc.ca/news/business/story/2012/11/28/banks-us-tax.html

    You don’t know a thing of what you are talking about and it sounds like neither does her accountant. 

    I can forgive him his ignorance because he is obviously not at all familiar with the unique U.S. reporting rules. Converting Canadian income into U.S. income is not a straight forward proposition of changing Canadian dollars into U.S. dollars and then just looking on the U.S. tax table to determine tax owing. 

    There are very unique rules as to how the U.S. categorizes and taxes different sources of Canadian income which determines how that income is taxed and the forms on which it is reported. As an example if your sister-in-law happened to have an employer funded retirement account then those employer contributions which are deferred under Canadian tax law are taxed as they are received under U.S. tax law. If she had any kind of mutual fund then any increase in the value of that mutual fund is taxed as it is realized as opposed to being taxed at the time it is cashed in. 

    In the end the truth of the Canadian/U.S. tax treaty is that the American side of the treaty is fraught with pitfalls that will invariably result in double taxation and ruinous reporting penalties. It never was the intent of the U.S. that any non-resident U.S. person should escape having to pay U.S. tax. 

    Now although it is true that many Canadians will not have to pay any U.S. taxes the truth is that the costs of having to hire a cross border tax agent are huge. I would also suggest that your sister-in-law find out if her accountant is even licensed to to U.S. returns. Under recently implemented U.S. tax rules all foreign U.S. tax preparers have to be certified with the IRS to complete U.S. tax returns.

    Now as for your claim that there are dual citizens living in Canada and using their dual citizenship as a tool to escape paying taxes in both countries. I would very much appreciate it if you could provide any evidence for your claim. If you can’t then it would seem that you are only repeating nothing more than myth.

    In order for your claim to be even remotely true it would be necessary for Canada to be some kind of immigration back water, which it isn’t. For you to make such slanderous statements about a group of people who have historically contributed so much to Canadian society is not only wrong because it spreads falsehoods but it also plays into the hands of the Americans.

    You may not know it but when it comes to countries that are tax havens for Canadian citizens it is the U.S. that gets that honor:

    http://www.cbsnews.com/8301-505144_162-57474364/canadas-favorite-tax-haven-the-u.s.a/

    No one comes to Canada in hopes of evading taxes. The truth of the U.S. tax evasion problem is that it doesn’t exist. Of the all the world’s tax jurisdictions the U.S. has one of the highest tax compliance rates:

    http://freedomandprosperity.org/2012/testimony-and-speeches/andrew-quinlan-remarks-on-fatca/

    so the U.S. does not really have a tax compliance problem. 

    The tax compliance problem that FATCA is designed to address is one that is purely made up because of America’s irrational and unjust basis of taxation. America requires all U.S. persons to file U.S. taxes because America doesn’t allow U.S. persons to leave America. All U.S. persons are deemed U.S. residents no matter where in the universe they may actually live. So your sister actually has two tax residences as opposed to one. This is highly illogical and grotesquely unjust to the U.S. person and where he/she lives.

15. Pingback: The Government of Canada: Toward a #FATCA IGA – Mass renunciation as a solution « Freedom from the tyranny of U.S. citizenship-based taxation for U.S. and dual citizens outside the U.S.

16. More in the same vein re FATCA and Canada:

    http://www.canadianbusiness.com/article/108316–banks-bracing-for-u-s-law-requiring-they-inform-on-dual-citizen-accounts

    ….”The challenge with FATCA (the U.S.
    law) has always been it is an extraterritorial application of U.S. law
    which conflicts in many regards, including privacy, with Canadian law,”
    Campbell explained. “Secondly, it is an intrusion of U.S. authority into
    the Canadian space and it is administratively a very, very burdensome
    exercise.”

    The federal Office of
    the Privacy Commissioner said they had been following the issue and
    that Canadian financial institutions remain subject to privacy laws.

    “They
    will need to be continually mindful to … limit the amount of personal
    information they collect about individuals, obtain consent for
    collections, uses and disclosures of individuals’ personal information,
    and safeguard the personal information in their care,” said Scott
    Hutchinson, the senior communications adviser for the commissioner.

    Hutchinson said the privacy office would respond to concerns “as they arise.”

    Finance
    Minister Jim Flaherty has said Ottawa is “nearing a conclusion” on the
    issue, suggesting a similar arrangement as reached by the U.K. is in the
    offing.

    “An agreement with the
    U.S. to share information on a government to government basis, within
    prescribed limits, will bring certainty to the application of the FATCA
    regime to Canadians, and will also facilitate compliance by our
    financial institutions,” he said in a statement.”….

    The Privacy Commissioner says that they will “respond to concerns as they arise”, but they must know that our personal data that crosses the border into the US – even for non-FATCA purposes is then subject to the Homeland Security provisions – making the US able to share the info widely – as they see fit, subject to no notice to the individuals affected, and no recourse or explanation. As far as I know, there is no recourse for Canadians, and for Canada’s Privacy Commission once the personal financial information crossed into the US – because the US reserves the right to use the information without any notice – so how would the Commissioner even establish that the information was secure, how it was being used or shared, etc.

    We already know that the US IRS has ongoing problems with securing taxpayer’s personal information – and that identity theft is rampant – and according to even the most recent public presentation by the Taxpayer Advocate Olson – it is getting worse, and the IRS is less and less able to cope. See presentations here: http://oversight.house.gov/hearing/identity-theft-and-tax-fraud-growing-problems-for-the-internal-revenue-service-part-4/

    We should provide this information to Minister Flaherty and the Privacy Commissioner now – and ask for their explanation as to how any Canadian citizen or resident account and asset information can possibly be safeguarded from the unlimited powers of US  Homeland Security provisions, and the total inability of the IRS to protect the information it collects already.

17. further to my post above:

    http://www.federalnewsradio.com/534/3139043/IRS-struggling-to-tackle-massive-surge-in-identity-theft-

18. “The federal Office of the Privacy Commissioner said they had been following the issue…”

    Sorry but that sounds about as comforting as “The cheque is in the mail.” Following is not good enough; only joining in the the fight against FATCA is good enough. I do not want to hear words like agreement, share, application, facilitate, compliance! And this is not confidence inspiring either …

    “Hutchinson said the privacy office would respond to concerns ‘as they arise’.”

    I don’t want them to stand back and let the banks completely gear up for FATCA and then deal with our “concerns” after the first person is either bankrupted by bogus IRS penalties or has bank accounts emptied as a result of identity theft. I want them to stand firm and say absolutely NO to FATCA and STOP trying to twist Canada’s sovereignty into a pretzel in order to accommodate American tax hegemony. Do they honestly think that passing private information from bank to Canadian gov’t to US gov’t to IRS to NHS to who-knows-where is acceptable and can be made “safe”? Not a chance!  

    This is the Privacy Commissioner’s e-mail address for “media only” — scott.hutchinson@priv.gc.ca — but I thought if I included our latest press release it would be okay to use it. If anyone has his e-mail address for “concerned citizens only” let me know. They might be trying to throw me and everyone else under the FATCA bus but I for one will not go without leaving deep impressions of my heels in the pavement. And I’m sure all Brockers will do the same.

19. @Em- as I read between the lines of what is coming out of Ottawa it seems evident to me that the politicians have rationalized handing U.S. persons over to the U.S. as an acceptable price to pay. Afterall it is only U.S. persons.

    All of which obviously is acceptable to them. But then you have to ask yourself what would they think of the implications of relinquishing sovereignty over another segment of the Canadian population that constituted a similar percentage as that of U.S. persons?

    Let’s say what if it were the Native population which has 4% of Canada’s population as compared to U.S. persons who make up 3% of the Canadian population. Would Ottawa still be as complacent about this whole affair then?

20. @ recalcitrantexpat

    Good point but we have to keep trying so I just sent an e-mail off to Hutchinson emphasizing the privacy aspect of FATCA.

21. Probably not what this audience wants to hear, but if I was on the Canadian side of the table on this one I’d agree to FATCA in exchange for as sweeping a set of trade concessions on the US side as I could get away with. 

22. @A broken man on a Halifax pier- Any American concessions would be purely illusory. I think that FATCA and the worthless tax treaties lay to rest any idea that the Americans honor any kind of agreement.

    A good case can be made that FATCA is itself a violation of NAFTA.

    The word of the U.S. is about as worthless as tits on a boar.

23. @a broken man on a Halifax pier

    Like the marshal arts athlete deflecting his opponents own force back at him, the Canadian government may have a tremendous opportunity here. Canada could come out smelling like a rose. I just don’t know how without making the US look like the aggressors they are, or to throw USP’s under the bus. If ever there was a time for diplomacy, it is now.

24. @A broken man on a Halifax pier

    The problem is, this FATCA IGA is not an negotiation, so the US is not going to give you anything outside the narrow confines of exempting some favored local financial institution like the credit Unions.  Bullies don’t do deals.  

    Now, if you really want something then it will have to be via the TPP negotiations that are starting in New Zealand today, but even in that, the U.S. just asserts what it wants, and even John Key says he he not surrendering sovereignty to the U.S. 

    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10851530 

    I agree with recalcitrantexpat.  Pick your analogy of worthless, and that what an agreements with the US is.  You will have to be more like the French, and just impose something like taxes on U.S. financial institutions, and then watch them squeal!  

    http://blogs.wsj.com/washwire/2012/11/30/french-stock-trading-tax-to-hit-american-investors/tab/comments/#comment-2702726.

25. The last two paragraphs of the WSJ article Just Me posted are just classic. Piss off if you want any US help with collecting your country’s taxes but when it comes to FATCA we expect the entire world to do our work for us.

    Rep. Tom Price (R., Ga.), a conservative Republican,
    introduced legislation this week to shield securities transactions in
    the U.S. from enforcement of any excise tax imposed by the government of
    France. It also prohibits Treasury from assisting any foreign
    government in collecting a tax on securities transactions occurring on a
    U.S. exchange.

    “Paying taxes to other countries is a bad idea – and we need a law to stop it,” Mr. Price said in a press release.