In March of 2020, @LizT1 warned that CDN Financial Institutions would come under increasing pressure to tighten the compliance requirements in #FATCA IGAs. "U.S. tax rules raising the stakes for Canadian residents with American citizenship" | CBC News https://t.co/2FdUY78ZlV
— U.S. Citizen Abroad (@USCitizenAbroad) September 6, 2020
March 2020: From Elizabeth Thompson of CBC …
Many Canadian residents with U.S. citizenship could risk fines or the closure of their banking or investment accounts in the coming months if they don’t provide financial institutions with U.S. identification numbers, officials warn.
Experts say that in some cases, financial institutions may close accounts rather than face fines for not providing U.S. social security or taxpayer identification numbers for clients who could be subject to U.S. income tax, such as dual citizens.
That means the stakes are about to get higher for those who haven’t been filing returns and for “accidental Americans” — Canadians with U.S. citizenship (from being born in the U.S. or to an American parent) who did not realize that, as American citizens, they’re obliged to file U.S. tax returns. …
Higher stakes in Canada
Mathieu Labreche, spokesman for the Canadian Bankers Association, said the association is waiting for more information from the CRA before commenting. He said the banks send the CRA only what Canadian law requires.
Alexandra Jacobs of the Canadian Credit Union Association said the association is working with stakeholders to ensure that credit unions meet their compliance obligations.
Grace Pereira is senior counsel with the BLG law firm in Toronto, specializing in advising investment funds. She said the stakes are higher in Canada than in many other countries.
“We did have the largest number of accounts with missing TINs,” she said. “I think we’re in this lull where we don’t know what is going to happen to those particular account holders.
“I have a lot of empathy for the financial institutions because, at the end of the day, how can they force somebody to get a Taxpayer Identification Number? Which is essentially sticking up your hand and saying, ‘Yeah, I’ve not been complying for all these years.'”
In July of 2020, the Canada Revenue Agency issued new #FATCA and #CRS compliance guidelines for financial institutions. Bottom line: In 2021 the requirement of a US Social Security number for reportable accounts (in FATCA IGAs) is likely to be enforced. https://t.co/D9i7CPwv8Y
— U.S. Citizen Abroad (@USCitizenAbroad) September 6, 2020
July 2020: From Grace Pereira of BLG …
Canadian financial institutions (FFIs) are subject to Canada’s implementation of the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) compliance regimes. On July 10, 2020, the Canada Revenue Agency (CRA) released new versions of the FATCA Guidance and CRS Guidance (collectively, the Guidance).
The changes in the Guidance will significantly affect fund managers and dealers in the context of client name accounts (i.e., investment fund units sold through dealers issued in the name of the beneficial owner). The relevant changes relate to reportable accounts with missing foreign taxpayer identification numbers (TINs), and how the CRA imposes the resulting penalties against fund managers and dealers.
This bulletin addresses the unique challenges of non-compliance penalties in the context of client name accounts. It also provides possible solutions for both fund managers and dealers. …
The penalties for non-compliance have always existed in the ITA, but the CRA has chosen not to apply them. However, the Guidance states that the CRA will begin assessing these penalties in 2021. As a result, FFIs may soon face large penalties if they are non-compliant across multiple accounts.
What does it all mean?
Nobody can predict the future with certainty.
On the one hand: The continuation of FATCA enforcement, is likely to make it increasingly difficult for Canadians (who are known to be U.S. citizens), to remain noncompliant.
On the other hand: The Canada Revenue Agency Guidelines include (at least for now) a provision that is good news (make sure you read it in context) for those who understand the importance of hiding their “USness”:
A financial institution should assume that an account holder is not a U.S. citizen unless the account holder self-certifies that he or she is a U.S. citizen, or provides documentation that either identifies himself or herself as a U.S. citizen (such as a U.S. passport) or reveals an unambiguous indication of a U.S. place of birth.
Probable Conclusion: As goes FATCA enforcement, so will go the number of renunciations of US citizenship.
Except now they’ve essentially eliminated the chance to renounce by closing that service?
How I wish my two children had renounced when I relinquished. 🙁
The CRA have no business broadening their overreach of personal data harvesting when they are incapable of protecting the data they already have, as demonstrated by last month’s hack. https://www.cbc.ca/news/politics/canada-revenue-agency-cra-cyberattack-1.5688163
It’s my secret hope that CRA receives CDs from all the Canadian banks then couriers a big box to the IRS. Very secure and extremely inconvenient.
I don’t remember your situation but if you children are dual citizens born outside of the US, then in most countries they can easily ignore FATCA and have no need of renunciation.
Repeating the non-slanderous element of my original, now-disappeared post that includes a timely question:
@Ron, haha, I wish. What they use to transfer personal data harvested under FATCA is a system called IDES which was developed by a company with close links to the NSA and CIA. No prizes for guessing who likely has access to our personal data https://www.mishcon.com/upload/files/29%20Apr%202020%20to%20OECD%20CNIL%20EDPB%20TAXUD%20and%20T-PD.pdf
This FATCA IGA in both counties is so unconstitutional how can even exist?!
It should be condemned and abolished. A bully action like this shouldn’t be allowed.
Please lets continue fighting to repeal FATCA.
Do banks and credit unions ask for proof of birth place of so what’s one’s options of they need to open a new account in canada
None the less … If bank found out you were born in the US … What’s one’s options out of curiosity… Get back in compliance? .. ignore it and try to open a account at a credit union ?.. You obviously need a financial institute for employment and to pay bills … I understand Canada won’t collect penalties fines ect. For the us.. Obviously you all are very up to date and educated on this .. Just trying to wrap my head around the what ifs…
Canadian banks do not ask for proof of birth or citizenship. They rely on customers to truthfully (or not) self-certify US citizenship, and they apparently make no attempt to validate the answer given. One may open an account with a drivers license as ID, which does not show place of birth.
If your bank discovers that you are a US citizen, close the account and open an account at another bank, without disclosing US citizenship. There is no reason to come into US tax compliance simply because there may have been a small amount of FATCA reporting (if you met the reporting criteria: balance in excess of US$50k for non-registered accounts).
If you are not comfortable lying to the bank about US citizenship, you could look for a small credit union that has opted out of FATCA. I’m not sure if they exist now, it seems that the initial holdouts have now added FATCA as part of their CRS compliance, unfortunately. Small credit unions are fine for basic banking but don’t offer much in the way of investment services.
That’s again for your replies ron .. I suppose I need to get over the unknown fear .. And just live life and if banks discovers citizenship move to a new one like you said …. And if the time ever comes if uncle Sam sends out mail just ..simply add to the shredding pile
That’s the spirit!