The National Law Review has just posted a new article by three partners and associates of McDermott Will and Emery, based in Boston and Chicago. It details FATCA obligations and repercussions for multinational employers, focussing on non-U.S. retirement plans:
What You Need to Know About Foreign Account Tax Compliance Act’s (FATCA) Impact on Non-U.S. Retirement Plans
Beside the usual canard that “An intergovernmental approach to FATCA solves these compliance issues, significantly reduces FFI costs and simplifies tax administration”, there was this statement on the status of IGA’s worldwide:
“As of March 15, 2013, Denmark, Germany, Ireland, Italy, Mexico, Norway, Spain, Switzerland and the United Kingdom have initialed or signed IGAs with the United States. It is likely that other countries will adopt IGAs, as the Treasury is engaged with more than 50 countries and jurisdictions to implement the reporting and withholding provisions of FATCA. It is anticipated that IGAs will be entered into with the following countries in the coming months: Canada, Finland, France, Guernsey, Isle of Man, Japan, Jersey and the Netherlands.”
I cannot speculate on the authors’ information sources, but here’s just one more sign pointing towards a Canadian IGA in the not-too-distant future. As Arrow has previously suggested, we Canadians may very well be thrown under the next omnibus bill the feds roll-out.
:”In the coming months” is the sort of vague promise/threat we’ve heard all along. I doubt this is really news, or that the author has any inside information. The coming months might be next month or 12 months from now. I’m not convinced that there is that much “evidence” that we’re going to be imminently “thrown under the bus”, although I really can’t claim to have any knowledge one way or the other.
Whichever way it goes, I would think that the next crucial date is October 25, 2013 – seven months from now – by which time FFI’s will have either boarded the FATCA train or will be left wandering aimlessly around the station.
My strong recommendation is that Issac Brock get the best and brightest (and richest) together now to be fully prrpared to seek legal action against the Canadian government to challenge any IGA. We can see it coming and immediate legal action should be initiated if it is put in place, and prior to that strong lobbying needs to resist it in the first place.
some FATCA reporting requirements will intrude on areas of provincial jurisdiction, we can count on Quebec to scream the loudest
The domestic federal/provincial dimension of this problem is one that hasn’t yet been discussed a great deal, but it will certainly move to centre-stage if the federal government actually tries to implement a FATCA IGA. We will quickly understand which population centres will be most affected by FATCA and I’m guessing a very large number will be from predominantly francophone communities all along the eastern townships of Quebec and western New Brunswick bordering Vermont, New Hampshire and Maine. It is vital for our francophone brothers and sisters to fully appreciate what is happening and to be ready to mobilize when our federal government capitulates to the U.S. There really needs to be much more discussion about this in the francophone press (as there also needs to be in the anglophone press, of course).
FATCA will not only test Canada’s sovereignty and resolve on the international stage – it could conceivably lead to the greatest federal/provincial crisis since Confederation, perhaps even dwarfing the 1995 Quebec Referendum crisis. All kinds of unintended consequences are possible.
@Deckard1138, As an Anglophone who has recently moved from Southern Ontario to Ottawa, I have wondered about how Quebec will react to FATCA.
@Steve Klaus, Yeah, as much as I hate to admit it, I think you are correct – an IGA is likely coming, and there will need to be organized resistance.
Seems like charters challenges are difficult and really expensive:
“Restrictions on legal aid and a decision last fall by the Conservative government to kill the Court Challenges Program, which helped fund individuals and citizen groups fighting for constitutional protections, have made the Charter more inaccessible than ever.
Today, many experts are pessimistic about its future as a tool in battling for equality and fending off unwarranted government intrusions into people’s lives. Like fine champagne, the Charter is in danger of becoming a luxury many never taste”
“Without some way of subsidizing the litigation, average Canadians stand no chance of bringing a Charter claim, Elliott said.”
Does anyone know if the situation improved since 2007 when this article was written?
Thanks for this, Chris. From that:
In other words, Canadian Government hypocrisy? Perhaps this is the reality the Conservative Government will use to rationalize signing an IGA with the US?
@calgary, re “Perhaps this is the reality the Conservative Government will use to rationalize signing an IGA with the US?”
Perhaps that is what the Harper government is counting on. That justice and fairness is too expensive for us to obtain.
Plus relying on the convenient US slander that we’re all ‘money laundering drug running terror funding criminals’ ‘hiding’ our CRA-registered TFSAs, RESPs, and post-tax wages in our ‘foreign’ ‘offshore’ local tax haven Canadian bank accounts – located just down the street from our permanent Canadian homes – where we happen to be Canadian citizens and residents.
But why let those petty discrepancies and > 1,000,000. Canadians get in the way of Harper’s trade plans with the US and the CBA’s access to US financial markets eh?
Seems to me it could be their thinking, badger. But, who am I to say? If so, it will show Canadian citizens and residents who happen to be US Persons, even “accidentals” with no choice at all in the matter of accident of their birth, will not be a priority for Canada.
Those are good points and I’ve been thinking along the same lines. However, I have also been thinking that once the million are fully awakened then it might be possible to raise the money necessary for a legal challenge. It would have been better to nip FATCA in the bud but with a much bigger pool of mad hornet USPs out there, post FATCA IGA, there just might be millions of dollars forthcoming.
“The government-prepared return would estimate your taxes using information your employer and bank already send it.”
Could this be where all of this FATCA reporting is leading? The next step is for the IRS to automatically debit your bank account (it will have the numbers to do it) and make you fight to get your money back when it makes an error.
Get this one before Facebook removes it. 😀 I figure it’s probably got about 1/2 an hour. 😀
Got it, Animal. Where’s that “force” when we really need it. 🙂
How many of these families will have a USP component? Does BMO (and other financial institutions who offer these) “warn” each account opener of the yearly consequences of the requirement to report this “foreign trust” account to the US, usually obliterating any benefit to a Canadian who is USP? That knowledge is essential to make proper financial planning decisions for the family.
@Em. THat is the way it works in Scandinavia—the tax return is already filled in when it gets to your mailbox. You can revise it or leave it as it is. Then you can approve it by signature or with an sms.
(although they don’t debit your account automatically)(But any tax lien in Scandinavia is collected by the state Collection Agency, with Powers to garnish or confiscate.)