This Brock comment which just appeared is deserving of its own post and your specific attention, thoughts and assistance.
But first, …
This has been a very interesting week for Canadians who are possibly impacted by the U.S. Transition Tax. We have the interview of the Hermans which appeared on the National.
Here is @suzanneherman1 on CBC The National talking about the transition tax https://t.co/UCEuDWBTA8
— Laura Snyder (@laurasn1000) May 1, 2018
We have articles by Elizabeth Thompson. I expect that Ms. Thompson’s articles led to the the following editorial in the Halifax Chronicle:
Halifax @ChronicleHerald understands that USA is attempting 2 confiscate individual Canadian pensions by using IRC Sec. 965 @USTransitionTax – CDN Finance Minister @Bill_Morneau must respond! Could include @Canadiansabroad @CanadiansInUSA @CDNSnowbirds https://t.co/lhdc1ydb5o
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) May 5, 2018
A second article from CBC indicated that Murray Rankin* (a 2014 ally in the fight to stop the FATCA IGA, had referenced the “transition tax” in the House of Commons.
Trudeau government should help those hit by #Trump #tax say MPs @MurrayRankin and @PatKelly_MP https://t.co/JxrapDuTq4 #cdnpoli #TaxReform #taxes
— Elizabeth Thompson (@LizT1) May 2, 2018
It appears that there is momentum growing in the “campaign for awareness”.
Moving on: How can we better frame the message? How can the right question(s) be used to educate?
It would be helpful for Brock readers and commenters to consider, when conveying the message:
1. What are the most important aspect(s) of the transition tax to convey?
2. What should be the language used to convey those ideas?
Beginning with the following Brock comment …
CAB asks for the assistance of Brockers as follows:
“URGENT I have been in contact with my local MP (conservative) and he is willing to submit a Question for Question Period regarding the Transition Tax. What I need to do is put together some background information and the actual wording of the question we want to have asked. There is no guarantee that it will be selected but it is certainly a shot. My understanding is that if not selected for this weeks question period then it can sit in the queue and be picked up at a later date.
My first kick at the can in composing a question — ” Mr. Speaker, The United States as part of their tax reform has recently passed a new law aimed at bringing home the profits of money off shored in large multi-national corporations. While it is laudable to repatriate these earnings back to the US homeland the application of this law makes no distinction between the large American corporations and those small Canadian corporations owned by Canadian citizens permanently resident in Canada but also hold a secondary US citizenship. These Canadian corporations owned by doctors, restaurateurs and small mom and pop shops are not Google and Apple . These corporations hold the retirement savings of Canadian citizens; the retained earnings of Canadian entrepreneurs ear marked to grow and expand their business. Application of this tax will effectively bankrupt Canadian businesses and wipeout the pension plans of our Canadian citizens. It is a violation of the Canada -US tax treaty as the US has created a fictional tax event retroactive to 1986 where the first right of taxation has been usurped by the US. First installment of this tax is due June 15 2018 .
Will the government of Canada commit to negotiating with US treasury to exempt Canadian corporations from the disastrous effect of this tax? Will the government use the the Canada US tax treaty to protect our sovereignty and tax base against this raid by the US government? The Finance Minister has committed to studying the effects of this extraterritorial law. But time is of the essence. Will the government provide direction to our citizens prior to June 15 2018 when the first installment is due.
Those affected are first and foremost Canadian citizens ,resident in Canada , and deserve the protection of the Canadian government.”Looking for your feedback – want to make sure I set the right tone and get the right question asked that will help us the most. Also any suggestions as to what I can include in the package that I need to send would be helpful.
Keep our fingers crossed”
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*For those who were not following this in 2014, you will see that MP Murray Rankin played a prominent role in opposition to the FATCA IGA. See here:
A handful of points:
1. I’ll reiterate what I said earlier in the week in my e-mail to Elizabeth Thompson: it’s super important to describe this as a problem impacting Canadian citizens living in Canada who happen to have US citizenship. (No I don’t have any numbers but I imagine that US-only permanent residents are a minority, maybe a small minority.) The CBC pieces did this very poorly, the Chronicle editorial was much better.
2. On my letter to various politicians, I cc’d my MP. No response. I will call the constituency office on Monday and ask them to support the question. One line of argument that might be used with Conservatives is to politely point out that while Harper didn’t help with the IGA, the late Jim Flaherty said the right things – he essentially encouraged non-compliance, by telling the US that it can impose whatever taxes it wants but the government won’t help it collect. (Feel free to steal anything useful from my text.)
3. From CAB’s text, I noted this: “Application of this tax will effectively bankrupt Canadian businesses and wipeout the pension plans of our Canadian citizens.” That tends to the hyperbolic. While it is very bad (particularly as Canadian tax would apply to the distribution used to pay the US tax) it isn’t necessarily going to wipe out pensions and bankrupt businesses. It will hurt all who comply, and destroy some, yes. Just be wary of exaggeration if this is a public statement.
4. I would actually quote the tax treaty: “…nor subject the company’s undistributed profits to a tax…” Refer to John Richardson’s part 11 piece just published on citizenshipsolutions.ca.
5. Also point out that federal tax policy encouraged the use of personal corporations, which are now a target.
I was wondering if there were any rules or guidelines for Question Period, and found this. Might be good to familiarize ourselves with them before making suggestions:
http://www.ourcommons.ca/procedure-book-livre/document.aspx?sbdid=3f818022-ad6e-411c-b495-ec000cf32935&sbpidx=2
@Nonymous
Thank for the reference to the late Jim Flaherty. Here are some articles from the Financial Post that illuminate his position on these issues:
September 16/11
http://business.financialpost.com/news/fp-street/flaherty-takes-on-irs-over-tax-crackdowns-in-canada
September 16/11
http://business.financialpost.com/news/read-jim-flahertys-letter-on-americans-in-canada
and interestingly from Lynne Swanson:
September 18/11
http://business.financialpost.com/opinion/dual-canadian-american-citizens-we-are-not-tax-cheats
Can you find the one where he specifically said that Canada would not collect FBAR penalties?
Re: Point 3 above
For……”effectively bankrupt”…. I would substitute…..”seriously impair (impede?) the operation of”….
For……”wipeout”…. I would substitute ….”significantly diminish (deplete?)”….
Also mention departure of capital from Canada!
For Jim Flaherty I’ve never found the public statement, but I quoted a private letter found here: https://expatsinca.wordpress.com/2011/11/04/encouraging-letter-from-finance-minister-jim-flaherty/
There was a ruling from CRA, reportedly:
http://business.financialpost.com/legal-post/cra-will-not-assist-irs-in-collecting-penalties-against-dual-citizens-subject-to-fatca/amp
I think of greater relevance here isn’t the refusal to collect FBAR penalties, but rather the tax treaty provision that there is no collection assistance for taxes owing (or any other form of tax-related penalty) against Canadian citizens, so long as the debt was not incurred prior to naturalization (which completely protects accidentals).
I agree.
https://www.maplesandbox.ca/wp-content/uploads/2018/03/Letter-from-FLaherty.pdf
Here is what CRA says:
https://www.fin.gc.ca/afc/faq/fatca-eng.asp
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https://www.maplesandbox.ca/2014/canadian-protections-from-irs/
***
Came across this, not specifically re Flaherty but answers to questions asked re FATCA:
https://www.scribd.com/document/202908661/Parliamentary-answers-on-FATCA
I appreciate the feedback so far but my MP will only submit a question that deals with the Transition Tax. I have been compiling the background documentation and will post the revised question for further input. Specific wording of the question on the transition Tax is the feedback I require.
Another kick at the can -please note I need to stay laser focused on the transition tax and it is not likely it will be read verbatim. I am just hoping by providing the text we can get across the gist of what needs to be addressed by the government and that we give them something very precise to work on. ” Mr. Speaker, The United States recently passed The Tax Cuts and Jobs Act which contains IRC 965 or transition tax , the purpose of which is to encourage US multinationals to repatriate earnings back to the US homeland. But the application of this law makes no distinction between the large American corporations and those small Canadian corporations owned by Canadian citizens permanently resident in Canada but who also hold a secondary US citizenship. These Canadian corporations owned by doctors, restaurateurs and small mom and pop shops are not Google and Apple . These corporations hold the retirement savings of Canadian citizens or the retained earnings of Canadian entrepreneurs ear marked to grow and expand their business. Application of this tax will seriously impede Canadian businesses ability to expand and significantly deplete the pension plans of our Canadian citizens. It violates the spirit of the Canada -US tax treaty that was passed to prevent double taxation. By creating a fictitious taxable event retroactive to 1986 the US has usurped our right to impose taxation as the contracting state where the corporation is located.
Will the Government of Canada commit to negotiating with US treasury to exempt Canadian corporations from the disastrous effect of this tax by advocating that dual Canadian American citizens or permanent residents of Canada be exempt from the Repatriation and GILTI tax regimes for any given year so long as they meet the conditions set forth under IRC section 911 and that person is an individual shareholder? The Finance Minister has committed to studying the effects of this extraterritorial law. But time is of the essence. Will the Government provide relief to our citizens and direction to the compliance industry prior to June 15 2018 when the first installment is due.
Those affected are first and foremost Canadian citizens ,resident in Canada , and deserve the protection of the Canadian government.
Never mind the spirit, I’d say it violates the letter of the treaty.
I’d still ask Morneau to publicly confirm the tax-treaty ban on collection assistance. Strengthens the negotiating position if you’d never help collect.
Going back upthread a few postings, I actually quite like the way the CRA guidance is written:
1. The US retains the right to tax its citizens wherever they live. (Subtext: we find this perverse.) 2. We won’t, however, help the US collect against our own citizens. (Subtext: if you choose to ignore compliance, we’ve got your back.)
Too wordy.
Make this about ALL Canadians. Not just those with US citizenship.
Emphasize that the US is demanding payments amounting to billions of dollars from the Canadian economy through Canadian corporations that do all their business in Canada. Emphasize that the US imposes taxes on any Canadian THEY deem are US citizens.
If you make.this about all Canadians and not just a small group you will get a lot more attention
Nononymous – “Never mind the spirit, I’d say it violates the letter of the treaty.”
Abiding merely by the letter of the treaty is what lets them get away with it. The treaty is supposed to prevent double-taxation but says it’s perfectly ok to double-tax USCs.
(Also, if they were violating the letter of the treaty they could be held to account; by sticking to the letter while trampling all over the spirit, they can force a USC to prematurely distribute income from a foreign corporation so that the US can tax it and refuse to give credit for Canadian tax paid. But this point is probably too complex to mention in a Question.)
Emphasing the spirit of the treaty, as in CAB’s draft, is the way to go, it seems to me.
CAB: I think the best advice you’ve received about how to write a successful “question” has come already from your MP. He/she has requested focus and I believe you’ve successfully achieved it. Possibly it can be honed a little more, but since you will never receive consensus here about a precise wording, if I were you I would send it to your MP as soon as you believe it’s ready. As you said: time is of the essence. You’ve had a great idea! I just hope it awakens the slumbering Canadian government.
Use words “extraterritorial double taxation” designed to circumvent tax treaty protections, no better illustrating the flawed nature of the tax treaty.
I think I need to doublethink about that, JC.
Not flawed – deliberately duplicitous.
I wonder at all the talk about “how many”. How many seems to be so important to the Canadian government, because if it is “too few” – then that merits not opposing a confiscatory government imposing a ruinous law on people? One million times 6 is getting close to the genocide Hitler committed. What is the NUMBER of victims needed to do something about this injustice? Why doesn’t the principle of this injustice suffice? How far will it go if left unchecked? If America looks back to see whose parents or grandparents or great grandparents were American immigrants – they could probably tax all of Canada!
Just saying…. but it stuck out to me in the film- always this “how many are affected?” business. How many Canadian citizens have to be affected for Canada to do something about it? How bad is it – trying to quantify the damages? How much are they taking? These are all excuses. This is because Canada is afraid of its neighbour. So I guess my question would be “How much does it take?” To finally tell the hypocritical bully down south “No” ? ( And what is so mind blowing is that if Canada and Europe bonded together in their no – America would be left powerless to do this. The days of tax evasion which started this whole manhunt is over, unless one wants to call America itself the new tax haven.)
“unless one wants to call America itself the new tax haven.)”
I think it clearly and demonstrably is, and it is yet more hypocrisy on a truly epic scale.
Godwin’s Law!
My advice would be to emphasize that this situation applies in cases of people who left the US as babies, and (quite incredibly) even to those who have never set foot in the US but are deemed to be US citizens by birth because their parents are citizens. For people like that, US citizenship may be entirely unwanted and not attributable to any action that they themselves have taken.
In many cases, such people are not even aware that the US considers them to be citizens. But whether those people like it or not, the US considers its citizenship, and consequently its taxes, to be something it can simply foist upon Canadians against their will. For such people, the transition tax is the financial equivalent of a drive-by shooting perpetrated by Uncle Sam.
Framing it this way makes it clear that many people affected are absolutely innocent bystanders. For the purposes of a parliamentary question, it doesn’t matter if not every affected person fits the description. It only matters that the absolute absurdity and unfairness of the situation is highlighted in the simplest and most accessible possible terms.
@CAB
@CAB Thanks for doing this with your MP.
Using Nononymous’ and maz57’s suggestions are an improvement.
I also agree with Sam and biscuit to emphasize that those affected are Canadians who are deemed to be US Persons by the USA (instead of saying “also hold a secondary US citizenship”).
Perhaps an emphasis on border babies… Having visited Cornwall, Ontario last fall, I was struck by how close the US border actually is after a day of boating on the St. Lawrence. I attended a Civil War re-enactment. Apparently, 40,000 Canadians fought in the Civil War for the Union. Almost everyone you talked had a connection to the US. Some connections were distance, but many were duals.