The Inter-Governental Agreement between Canada and the United States (IGA), which will implement FATCA regulations in Canada, is sufficiently complex that it will take some time before Canadians come to grips with what rights our government has traded away and what safeguards are in place to protect, hopefully, the majority of us. While I am completely against the CRA trading the private banking account information of Canadian residents and citizens with the hostile government to our south run by President Obama and his band of merry thieves, who steal from the poor to give to the rich, I do believe that the vast majority of Canadian residents can protect themselves. We now have not only to navigate the treacherous waters of IRS threatening to fine us at multiples of our total financial wealth (up to 380%), we must also know how to deal with bank’s inquisition which will begin to question all Canadians: “Are you or have you ever been a US person?”
This means that the Canadian government has left hapless citizens to know how to protect themselves. We must all be bad asses–Clint Eastwoods–with a “Go ahead and make my day” attitude not just in the face of the IRS, the US tax compliance industry in Canada, and US border guards, but also now, with the sanction of the Tory government, in the face of the inquisition that is taking place at our banks. Under no circumstances do Canadians want their banks to believe that they are US persons, because at that point, the bank will be obligated by this unlawful law (i.e., IGA) to betray their bank account information (though not RRSP, TFSA, RESP and RDSP accounts) to the criminal IRS in Washington, where we have no representation. I am not trying to scare people. But the loss of Canadian sovereignty is happening in baby steps of which the FATCA is a major accomplishment.
In the post, “Prove you are not American“, Schubert, in his classic exuberant fashion, made an important comment saying that we should not scare people with incorrect interpretations of the IGA: The banks will not be asking for proof that parents and grandparents are not US citizens. But this does not take into account the over-zealous twit who may land himself or herself a nice position as bank inquisitor. It is now their duty to ferret out “US persons” hiding their true status. Consider the closure of accounts of US persons in Switizerland, even when they are resident in Switzerland and citizens of Switzerland. To my knowledge, there is actually nothing in the agreements between Switzerland and the USA that requires Swiss banks to do this, but in their attempt at CYA (cover your ass), they have decided that the safest thing to do is to close the accounts of US persons and not permit US persons to open new accounts or even renew mortgages.
Consider the following paragraph from the IGA dealing with new accounts (p. 23; emphasis mine):
If there is a change of circumstances with respect to a New Individual Account that causes the Reporting Canadian Financial Institution to know, or have reason to know, that the original self-certification [that person is not a US citizen] is incorrect or unreliable, the Reporting Canadian Financial Institution cannot rely on the original self-certification and must obtain a valid self-certification that establishes whether the Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting Canadian Financial Institution is unable to obtain a valid self-certification, the Reporting Canadian Financial Institution must treat the account as a U.S. Reportable Account.
Now imagine the following scenario:
Canadian-born Johnny banks at TD in Huntsville ON. The new manager, Jim, went to High School with Johnny. Jim knows that Johnny’s father is a US citizen, while Johnny’s mother is a Canadian. Johnny lived for ten years in the US and moved back to Canada and was a new student with Jim in grade nine at a local school. Oops. One day, Jim recognizes Johnny his former high-school mate and decides that he must call Johnny in for an inquisitional hearing. Johnny tries to prove he is not a US person, but to no avail. He has never obtained a CLN or his dog ate it. Never mind why, he can’t prove to Jim that he is not a US person and he becomes a specified account holder. The change of circumstance: the manager Jim knows Johnny personally, and since Jim is a complete dick (enough of these sort of people in every country), he gives Johnny’s account information, as specified under FATCA, over to the CRA, which then sends it to the IRS.
This is not likely to happen every day, but it will certainly happen in a country of 30 million people with as many as 1 million so-called US persons. So now I really believe that the IGA is irresponsible on the part of the Harper government, and it is a step towards the annexation of Canada by the US. But for now we have some ability to protect ourselves.
Hey, Chears, I’m putting together $$$ to make my first purchase of gold bullion. I get the feeling that…yes…it’s a safer bet. Screw the banks… I’m done with them.
other than a small amount of operating cash…I’ll stick my $$$ in gold.
One simple question I have… What if we don’t file income taxes with the new CRA/IRS? Do we have a case in court? I will not file my personal information with a foreign company. As the lady who went to court for not filling out her census as it was an American company and she had privacy issues. I wonder when we’ll get the official name change… CRA/IRS
Umm.. u got the name wrong… its should read…. IRS (Formerly known as CRA)
“Last year, a lot of gold buyers got creamed, so nothing is a sure bet… Just my opinion, and I could be wrong..”
Uh no more than currency speculators or stock traders. Leave your money in the bank at 1% interest per year. There are many types in this world but the bank savings people are the ones getting creamed because every single day they are losing money to runaway inflation in Canada. Also don’t think for a minute that gold and silver aren’t manipulated by the COMEX and central banks. Knowing this protects me from the ups and downs and knowing one very very very important FACT……..no currency on the face of the Earth has ever survived as long as gold. Gold is real money and is difficult to obtain from the ground. Paper money is limitless and in no way stable or long lasting. Don’t worry about the swings in metal prices because the prices are set by crooked banksters and in no way reflect the real value of the metal. The last thing the Fed wants is for people not to think the way you do. They want all the brainwashed masses to follow like blind sheep as they are herded off the cliff.
People had better listen to Celente
He is almost never wrong
I appreciate your passion and points of view you bring to the subject.
I understand all the gold arguments and paper follies. That said, there is NO SUCH THING as a sure bet, and this is NOT an investment advice blog, so I will make my own decisions as to how to invest without being a “blind sheep” Ultimately, Nothing is of tangible value, not even GOLD. I understand it merits over other vehicles for storing value and keeping score of some mythical number of what you are worth as compared to another, but like everything in life, value rests in the mind of man. It is man that creates value, not some animate object by itself. The only real value is the amount of Life Credit Units you have left, and how you use them. Invest wisely in those.
Well the sure bet is if a person stays in the banks they WILL lose. That’s the sure bet. And this forum is for ideas on how people can protect themselves from dictatorships that are bent on stealing what isn’t theirs because they think by intimidation they can get away with it. I’ll tell you….go to a bank and tell them you are thinking of closing your account and buying gold bullion and watch their normally smiling face turn to fear and dismay and look at you like you like the one that got away. Nothing creates fear in a bankster more than the mention of gold. I urge anyone here to go into their bank and ask them what they think of that idea and watch them wriggle around like a fish out of water, I guarantee it.
Must Listen….Jim Sinclair
@animal…….the best move you can make. If we can get 1,000,000 Canadians do do likewise we can bring down the financial system that is screwing us. How about the 1 million that convinces the other 5 million related to the them to do the same. Let’s say 5,000,000 people buying 50 ounces of physical bullion. That’s 250 million ounces of gold. The whole reported gold reserve in the USA (which is bullshit) is 150,000,000 ounces ……
and Mike Maloney thinks $5,000 PER OUNCE IS GROSSLY UNDERVALUING GOLD so we all can come out smelling like roses as our banking system collapses as rightly it should for abusing us. Just do not buy anything except REAL PHYSICAL GOLD, not paper promises such as ETF’s IF YOU DON’T HAVE IT IN YOUR HAND…YOU DON’T OWN IT.
@ChearsBigEars, Sorry, 1 or 5 million Candians can’t each buy 50 oz of gold. I doubt that they could even buy one oz of gold. From what I can see in the precious metal retailers, there just isn’t that much physically available. That’s an impossible scenario. Fortunately, for those of us trying to establish a position, there is a barely adequate supply available, but if there was a sudden increase in demand, that would no longer be the case. The problem with the manipulated market is that the price of gold and silver is unable to make supply available at a reasonable market price. Thus, strong hands hold and the supply runs out. This happens every time there is a drop in the market price.
When the demand for a scarce resource shoots up suddenly, so will the price, and that price will rise as demand increases, lowering the ability of those who are unwilling or unable to pay the higher price. This means actually that the price of gold has unlimited upward potential, particularly in a crisis. The reason for this is is that there are quadrillions of dollars worth of derivatives in the world market. This is a volatile scenario in which hyperinflation or hyperdeflation could happen within seconds or microseconds, thanks to high frequency flash crashes. My bet is that the US dollar will one day crash, and that gold will have no upward limit in price. In such a scenario, $50,000 is far from unthinkable, and $1000 silver.
@Just Me: I will refer you to some blog posts that I’ve written. Physical gold has tangible value–as does spam and brass. You can touch it, and it is not a derivative. It also has “intrinsic” value, in that it’s value comes from itself and it does not represent something else. Arguably for those who believe in God, gold was created as something valuable that could be used as money or as art. Yes, arguably precious metals have value because of their special qualities and because of their relative rareness. Gold thus has great intrinsic value. I once commented in reply to the economist idiot-savant Nouriel Roubini who says that gold is a barbaric relic with no intrinsic value:
The US dollar, as all paper currencies, is a derivative: it represents something of value but has no actually value in itself. Just what any more is unclear because they no longer are exchangeable for gold or silver (since 1971). I wrote:
There is no hedge: as Zerohedge and Fight Club make clear, “On a long enough time line the survival rate of everyone drops to zero.” Jesus claimed that one could store treasure in heaven by being generous towards the poor. But from a this-world perspective there is no sure bet. Gold will never drop to nothing. But thieves can steal it. Governments, the biggest thief of all, will confiscate it. As Hugh Hendry has said, the reason he doesn’t invest in gold mining companies is that the success of the gold price increases the probability of national confiscation of gold mines.
Finally, it is clear that countries with copious amounts of US dollars are moving their holdings to gold in slow and shrewd manner. This is especially true of China. And the Indian people own more gold individually than most Western countries.
You brought up Zero Hedge. Zero Hedge is by far the biggest and best financial blog out there. I wish someone would write FATCA articles for them every few days. Everyone in Washington and Wall Street reads it
@ChearsBigEars, Regarding Zerohedge, I agree. What is lacking in mainstream media is really insight. But then, you cannot take seriously the media, even the financial media, when they discuss serious political or economic issues in one breath and in the next breath they want to talk about Justin Beaver:
Funny how the mind works. I woke up this morning thinking of the Salem witch trials, and then I remembered Margaret Atwood’s poem “Half-hanged Mary” about a woman who was hanged but didn’t die. Then I saw the picture accompanying this post, and my mind said, “There’s a line in that poem about taxes.” So I got the poem, and it was not “taxes,” but
“The rope was an improvisation.
With time they’d have thought of axes.”
Interesting piece ‘Canada Reaches Agreement with the US on FATCA’ that goes into what the CRA will and won’t be collecting. For example, it will not be collecting the fines connected to reporting, such as FBAR fines, according to the article.
It is really disconcerting that FATCA is getting next to no coverage in the U.K., even though it enforces laws that will make life extremely difficult for anyone without an employer-supported pension plan. I have read that some American professionals had actually been advised in the past to leave company pensions plans by clueless financial planners (not sure when this happened, sounds like the late 1990s dot.com bubble).
The problem may be bigger than the .3% figure suggests. Americans probably have more than .3% of the U.K. banking accounts given that the average salary of people born in the U.S. was 50% higher than that of the general U.K. population in 2006. I also suspect, given the long links between the two countries, including historically a substantial military presence, that there are lots of people who are American in the IRS’s eyes but do not know it yet.
It is a huge disappointment that there isn’t a more critical voice somewhere in the media. That appears to be the case not just in the UK. Sadly, newspapers have become just summaries of press releases. There is a dearth of critical analysis.
I would agree that the problem is bigger than 0.3%. That number was based on the number of people that listed the US as their place of birth in the last UK census. That would exclude those who have US citizenship other than as a result of place of birth.
The disparity in the average salary more than likely results from the higher proportion of US citizens that work in finance in London relative to the rest of the UK population.
Barclays, at the moment, is the only provider on online investment accounts I can find that will accept US citizens. Hargreaves Lansdown told me that they would also take US citizens but their terms and conditions did not reflect FATCA (ie requirement to file W-9 if a US person) the last time I checked.
“Now imagine the following scenario:
Canadian-born Johnny banks at TD in Huntsville ON. The new manager, Jim, went to High School with Johnny. Jim knows that Johnny’s father is a US citizen, while Johnny’s mother is a Canadian. Johnny lived for ten years in the US and moved back to Canada and was a new student with Jim in grade nine at a local school. Oops. One day, Jim recognizes Johnny his former high-school mate and decides that he must call Johnny in for an inquisitional hearing. Johnny tries to prove he is not a US person, but to no avail. He has never obtained a CLN or his dog ate it. Never mind why, he can’t prove to Jim that he is not a US person and he becomes a specified account holder. The change of circumstance: the manager Jim knows Johnny personally, and since Jim is a complete dick (enough of these sort of people in every country), he gives Johnny’s account information, as specified under FATCA, over to the CRA, which then sends it to the IRS.”
Drive to nearby town, city and set up a bank account with your driver license. It is best to do it before the law takes effect.
If you get nasty letter from IRS if they find you out, throw out the letters and do not cross border. Banks can not close accounts of recalcitrant accounts. They can not even withhold 30% of earning on US assets.
I have buttonholed my UK MP regularly over FATCA for over two years now, covering both before and after the IGA. Although he’s taken no real action, to his credit he has passed practically everything along to the Exchequer Secretary to the Treasury. Unfortunately, the latter behaves as if wearing teflon. He fails to recognize the problems that are occurring now and which will worsen as FATCA fever settles in to UK banks. I feel like a lone voice crying in a wilderness. But since email is free there’s no harm in regularly reminding the UK govt of the mistake they made when they signed the FATCA IGA.
If UK govt interest is minimal, then UK press interest is nil. I have tried several nationals over the years, with not even a single response. I’ve also attempted letters, again with no success. The thing is, until the SHTF, nobody is really interested. To be honest I don’t think many folk believe the agreement can be as bad as we know it is. Perhaps now that the effects are being seen on the ground — individuals denied accounts, intrusive questioning about any and all US connections, and so on — it might gain some traction in the media. Even so, though, I’ll not hold my breath.
Watcher will UK amend it FATCA to the Canadian standard.
@GeorgeIII, who knows? I haven’t really looked at the Canadian version, so I don’t know what ‘most favoured’ stuff the UK could mine from it. In practice the UK laws to implement the current US/UK FATCA IGA have already been passed (waved through unquestioned), so in a sense the ship has sailed, and any opportunity to improve the UK IGA is probably lost.
Yes, if there is a more favorable provision, it applies to all IGAs previously signed, but without a side by side comparison (I have not done one) I doubt there is much new in the body of the IGA. But I confess, I have not had time for the analysis…
The annexes of the IGA are country specific, and I am not sure that “most favored” rule applies. Also, the Legislative interpretation by each separate government again, will lead to differing practices which could make a cross jurisdictional FFI compliance job absolutely miserable! Serves them right for advocating for the IGA.