To help you judge if,
your experience with your local bank, credit union or insurance company (or as the US defines them: “foreign financial institutions”) will be a comfortable one, as some advertise,
shared here are excerpts of notes from a meeting set up with a “US Person” and Canadian husband by a Vice-President of the wealth management branch of one of the Big Five Canadian banks:
1. ..all previous recommendations for changing investments have been done by telephone… In all the years as clients, they never requested a meeting with us.
2. re green card assumption and location of the company worked for (this question is one way to find out if a person has worked in the USA). *(see below)
3. Bank representative met with each of US Person and Canadian husband alone as they do not have joint accounts.
…wanted to sell US Person’s non-registered mutual funds and give the cash back to local branch of the bank (it is not worth their while “all the paperwork” to accept clients with less than $500K!!!!) US Person refused….had asked on numerous occasions for the names of PFIC compliant funds. At the end of the meeting he agreed to come up with a list of PFIC compliant funds. Until 10 days ago he did not know the meaning of PFIC. Asked why he would sell me mutual funds if other investment companies have known about the IRS rules since 2010. His answer: “we’re not expected to know – we ask people to check with their tax accountant” Then he asked ME if it is OK to have mutual funds in an RRSP.
4. … asked to do a review of our net worth. When I told him that for the past five years my annual gross income is about $23,000, he looked horrified. US Person says “I don’t think I fit the “wealth management” profile, even if I were not a US person.” He kept asking about credit lines – three times and looking at me each time. Non-US husband uses credit line. It is important the other US persons know that credit lines will count in their highest and year end balances for FBARs and FATCA tax forms 8938, and of course in the aggregate $50K US that the banks will report to CRA.
5. US Person asked him how many accounts the “wealth management” part of this bank has with Canadians with US connections. He replied “not as many as you think”. US Person said that she should have replied “by the time you get through with turning over all the names of people with US indicia, you could be looking at 200,000 or more (dividing the one million US persons among the big five) Canadian clients that you will lose!”
6. Same story about registered accounts being exempt – this V.P. could not grasp the concept of US persons being thrown under the bus (did not bother to try to explain – and his office spent hours writing letters etc. when my very savvy (sarcasm) IRS agent could not understand that the separate tax slips for each mutual fund were declared on both my Canadian and US returns. “This V.P. knew about the monstrous fine, but I am sure he must think that I am one of those tax cheats you read about in the newspapers.” AND, the head office used to issue 1099 forms, but this stopped in 2011.
Comment by US Person after this experience: Wealth management V.P. said that the reason for all the paperwork was because of 9/11 – does he think we are as ignorant as he is?!
Definitely an uncomfortable experience.
*US Person said from separate meetings V.P. assumed that Canadian husband had a green card and that he had lived and worked in the USA. Canadian husband wrote letter saying that he worked for an international company for almost 40 years in three different countries but NEVER worked or lived in the USA. He has only one citizenship, Canadian. Canadian husband told the V.P. that he did not have permission to send his Canadian citizen private financial information to CRA for onward forwarding to the IRS.
Canadian husband also asks for copies of all documents signed the day before (should they have been changed after the fact). …and finds it rather odd to have to give the name and location of the company he retired from 13 years ago (before 9/11), as a source of investments.
What does it mean that a credit line will be counted in their highest and year end balances? Does that mean the whole line of credit if not used? The used portion? The unused portion?
Oh well then, whatever were we worried about? *snark*
That was as comfortable as a root canal!!
Why would a line of credit count as a positive balance when it is either 1) unused and hence owned by the bank or 2) a debt if used by the customer?
Is this serious, or just another one of Petros’ tongue-in-cheek specials?
re green card
” I hold a U.S. green card. How does this affect my tax residency?
If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.
However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
@PierreD – Petros did not post this…this is from Calgary411 who is not usually a tongue-in-cheek poster
I can’t believe they are counting credit lines in this? Really? We have a home equity line of C that allows us to access fifty K out of our own home equity. That would count towards the fifty k reportable accounts. :S insanity if that’s true. We take that money from ourselves if we take any. It’s home equity.
I’m glad I got out.
This is going to get really ugly.
GwEvil,
I don’t know that answer. I wonder if it has to do with the dollar amount that you COULD draw from the amount your line of credit is approved for; i.e. it could be money in your pocket if you drew on the balance not in use? (I think this same phenomenon can affect your credit rating if you have too many credit cards, just for the fact that you could charge up to the limits.) I think that whatever you owe on a line of credit or credit card would be a liability to be subtracted from the total assets in determining Net Worth. Though, I’m the wrong person to even speculate.
Anyone?
Everyone: write that on your hand before any such meeting. This is advice to us from CRA!
Is a paypal account a reportable account?
@bubblebustin – lol
@calgary411 – if this is true, then it would make all credit card accounts reportable, as well, because depending on your credit limit, you “could” take out over $50,000….insane!
I sent the link to this post to Charlie Angus, my MP. I have a line of credit I have not drawn on since 2005. It is like an emergency back up. It is half a grand.
I am also concerned that the banks are not going to be knowledgeable and really do harm to their customers by not being informed of FATCA. It is not July 1st and banks are doing this now. I did not expect this.
This post indicates the banks do not know what to do.
I have several credit cards as well.
This is getting to be grievous.
the copy stinks because it from a PDF go to
page 117
http://isaacbrocksociety.ca/wp-content/uploads/2014/03/CRA-Draft-Guidance-for-Financial-Institutions-March-06-2014-2.pdf
“10.46
A financial institution does not have to review certain credit card
accounts and other revolving credit facilities (hereinafter referred to as “cred
itcard accounts”) opened after June 30,2014.
10.47
A credit card account is not required to be reviewed provided that the
Canadian financial institution that maintains the account:
has policies and procedures in place to prevent a balance of more
than US$50,000 being owed to an account holder for more than
60 days,and
118
10.48
A financial institution may designate all credit card accounts
or a clearly identifiable group of accounts, such as by line of business or the location of where the account is maintained.
While the above provisions in the Agreement apply to new entity accounts, credit card accounts that are
individual accounts or pre-existing entity accounts can benefit from the general threshold exem
ptions available to those categories of accounts.
@GeorgeIII – cold comfort for those of us with lines of credit!
This is going to be a bigger fluster cluck than I even thought before. Banks are going to get screwed up and frustrated and just report anything that even looks like it might need to be reported.
Hello? If you are reading this anyone in charge in the U.S. Hurry up and get us our CLN’S! You forced us out and you know it so just give us the piece of paper we were made to apply for. What a cock up this all is!
The more I learn… the more I am frigging twitching… geez… this is going to be bad…
@GwEvil
Every one of us has a line or many lines of credits… Maybe I should just give everything we have to the 1st class canadians in my family & let them support us with our money… how much of an allowance do u think the toddler will allow me… especially if I hold their binkie for ransom?? lol… If I don’t laugh at this… I could cry… This is going to be very, very ugly when this crap goes through…
All,
Keep in mind that this is the experience of one US Person and her Canadian spouse, first among us, to go through something like this. They knew she was a US Person. I put it up to have anyone else be the judge of what might happen when / if they have such a meeting. It is not to say that every meeting will go like this, that everyone will be asked the same questions (seems I’d almost want a lawyer present). Like the Consulate Directory Report, it is the report of one experience and many will paint a clearer picture. We can learn from each such report we receive here.
Will every financial institution experience and even each such meeting within one financial institution be so different as to not resemble this? Who knows? It is not meant to scare; it is meant to anticipate what might happen, not necessarily what will happen. It is meant to help prepare, not give you even greater stress.
The words I want to say cannot go here for what this couple has gone through, but I’m sure you’ve gotten some of it through mental telepathy.
What is YOUR definition of “comfortable”?
I will finish cleaning the mouse poop from the garage. Also I hope I helped somebody who has been excised from that foreign country.
There is only one thing that gives me comfort, and that is this: My bank never knew, does not know now and will never know, that I may ever have been or could be now, a US person of any shape or kind.
Speaking of almost wanting a lawyer present, something I found interesting was that the banker questioned (sorry, met with) each spouse separately. Even with a personal, not joint, account, you can have your spouse (or anybody, I think) present if you so desire. Rather reminded me of cops interviewing two people separately to see if they can find inconsistencies.
@em
Good banker, bad banker?
@calgary411
I understand its just one person’s perspective… I would have never even thought of the line of credit… I am learning something new with each person’s story… what next… they will want an accounting of every bottle redemption I may have..lol… This is just getting sad that every single potential $ is being sought after… one thing I learned… we must be very aware of all things that are safe for 1st class citizens maybe deadly to a 2nd class even though the info is given by a so call expert… And I thank & appreciate everyone who puts out their story…
We should boycott the big banks or at least publicly advertise against them. Policitians are used to getting nasty things said about them, but banks are very sensitive to reputational damage. Let’s get real–Canada’s “democracy” is bought and sold by the banks, just like the US, and we have to focus our energy against the banks too.
“AtticusinCanada says
April 12, 2014 at 9:13 pm
This is going to be a bigger fluster cluck than I even thought before. Banks are going to get screwed up and frustrated and just report anything that even looks like it might need to be reported.
Hello? If you are reading this anyone in charge in the U.S. Hurry up and get us our CLN’S! You forced us out and you know it so just give us the piece of paper we were made to apply for. What a cock up this all is!”
Getting a CLN will get you on US tax radar, Depending on relinquishment date you may avoid tax consequences.
The Canadian FATCA does not really require you to complete exit taxes even though the USA will consider you a US person for tax reason. The European FATCA requires you to be compliant with US exit taxes. People who indices are hidden; no current address for account under 1 million. no US birth place may consider the option that they have relinquished US citizenship. The Canadian FATCA allow Canadian citizens to explain why some action was a relinquishment along time ago. I think Blaze can claim, that her swearing allegiance to the Queen in the 1970s was her act of relinquishment.
“Does the agreement require Canadian financial institutions to report to the CRA on any individuals who were told that they relinquished their U.S. citizenship when they became Canadian citizens?
The agreement does not require Canadian financial institutions to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S. ”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
Of course, other than doing the full exit tax routine, you are not safe crossing the border.