Robert Wood reminds us who’s the boss off the ice:
Canada Defeats U.S. In Hockey & Gold Tally, But Not At FATCA
Hockey rivalries and FATCA all in one convenient package – this should generate some interesting comments.
In order to best serve all needs, this post is for any further questions, comments and updates for the London UK Info Session.
Please note that The Church Hall is a separate location to the church
itself and is located about 100m north of Euston Road and about 30m east
of Eversholt Street on the southern side of Lancing Street.
For access, please ring the “Church Hall” buzzer to the right of the
entrance. The Church Hall is located on the second floor of St. Pancras
Church House.
Transport: The nearest train station is Euston. The location is also
within short walking distance of King’s Cross/St. Pancras train station.
The nearest Tube stations are Euston (Northern and Victoria), Euston
Square (Hammersmith & City, Metropolitan and Circle) and King’s
Cross/St. Pancras (Piccadilly).
Editor’s Note: Finance Minister Jim Flaherty announced earlier this month that Canada and the United States have signed an intergovernmental agreement under the Canada-U.S. Tax Convention on US access to financial accounts held by dual US-Canada citizens. Since the announcement, CARP has heard from numerous members who are dual Canada-US citizens concerned with the financial and privacy implications regarding the new Foreign Account Tax Compliance Act (FATCA) agreement. CARP has shared with Finance Minister Flaherty’s office the views expressed by our members Minister Flaherty has responded in a formal letter to CARP members. Below you will find the full contents of the letter: – See more at: http://www.carp.ca/2014/02/22/federal-minister-finances-message-carp-members-canada-won-privacy-protection-exemptions-relief-fatca/#sthash.o374vF8J.dpuf
It is true, as Finance Minister Flaherty points out, the actual requirements for US Persons to file and report (paying ‘compliance industry professionals’ if they are not capable of dealing with the complexity in fear of penalties) and to remit to the IRS actual taxes owed that are not covered by the US / Canada Tax Treaty are not within the power of Canada to change — EXCEPT there should be immediate revisions to that US / Canada Tax Treaty to REALLY EXEMPT much of what we will continue to be faced with.
…
What We Won
Blaze and I have sought advice on how best to proceed with a legal challenge to Canada’s proposed IGA legislation to implement FATCA.
The advice received from legal people we consulted is that the first step should be to obtain a “warts and all legal opinion” on the merits of a challenge and that Joe Arvay, given his expertise and credibility, is the one to do this.
Please provide your comments and suggestions to this proposal, originally posted on Sandbox:
http://maplesandbox.ca/2014/possible-charter-challenge-legal-opinion-needed-and-funds/
“As most of you know, the possibility of a challenge under the Canadian Charter of Rights and Freedoms has been discussed for some time.
With the signing of the IGA and proposed legislation to override existing Canadian laws, we need to determine our next steps.
http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
http://www.fin.gc.ca/drleg-apl/2014/can-us-eu-0214l-eng.asp
Prominent Canadian constitutional lawyer Joseph Arvay has reviewed the IGA and the proposed legislation. He has recommended as the first step a formal legal opinion to advise if a challenge would have a reasonable possibility of success. In his letter to me (real name and address removed)
http://maplesandbox.ca/wp-content/uploads/2014/02/Mr-Arvay-Opinion-Letter.pdf
Since no one has posted officially about this milestone, I thought I would pull it out of some threads for wider attention.
The Treasury announcement that the final regulations have been released has lit up the FATCA Compliance Complex (FCC) Linkedin groups and various tax blogs.
It was reported on at Reuters in the Tax dodge language we have come to expect out of them. Treasury tweaks global tax dodge law one last time
It was more extensively described in an Accounting Today Article Treasury and IRS Amend Final FATCA Regulations
Where this interesting comment was made by an “unnamed Treasury official”
Asked about the increase in citizenship renunciations by Accounting Today, he pointed out that there are a number of reasons why a citizen may decide to renounce their citizenship and expatriate, and there is not necessarily a direct correlation between FATCA and the increase in renunciations in recent years. Continue reading
Comments on the legislative proposal can be submitted to the Department of Finance at IGA-AIG@fin.gc.ca
or to the address below. The closing date for comments is March 10, 2014.
Tax Policy Branch: Department of Finance
140 O’Connor Street Ottawa, ON K1A 0G5
My submission is below. Some will say it is too wordy. Some will say it does not cover everything. I know that and I could make it even more wordy, but I am addressing only one of the unjust aspects of allowing to stand as is the FATCA IGA signed by my Government of Canada.
I am more than weary from the one-way conversations I’ve had with most of my previous correspondence. I hope that this announcement means the Government of Canada really is going to listen to my, your, our concerns, the very US Persons in Canada who become the collateral damage of US FATCA combined with US citizenship-based taxation.
MacKenzie to provide Cdn fund investors with information to file IRS #PFIC forms http://t.co/YDV7A4SsnD – Smart business move!
— Citizenship Lawyer (@ExpatriationLaw)
Fidelity CA takes lead in Cdn fund industry by making it possible for investors to make QEF election for #PFICs – http://t.co/64XOpOxvm9
— Citizenship Lawyer (@ExpatriationLaw)
A Canadian received a message from his financial adviser that included:
Mutual Funds, U.S. Taxes, and Your Clients
PFIC
With the new rules coming into place, we are the only firm I know of that is providing the ability to file a QEF election for the 2013 tax year. Therefore if you have any clients with us that are US persons and file US taxes, we have the ability to provide Annual Information Forms for all their holdings that they can use in conjunction with Form 8621 to file a QEF election with the IRS.
We can provide Annual Information Statements for all of our funds. In providing these statements, we simply need to know which of your client’s need them; since we have no way of knowing whether your clients are “US persons”. Once we know which of your clients’ need the Annual Information Form, we will prepare and send them to you.
The bottom line is:
Fidelity Canada appears to be the second Canadian mutual fund company to market their Canadian mutual funds in such a way that investors can avoid the default S.1291 confiscation taxation scheme. Fidelity is providing the “paperwork” which allows fund investors to take either the “QEF” election or “mark-to-market” election (which are the least punitive of the three PFIC elections).
As you know a “critical mass” of opinion takes the position that Canadian mutual funds are PFICs. A mutual fund, deemed to be a PFIC, can be taxed in three different ways. Those who are interested are invited to read our submission – PFICs and the taxation of Americans Abroad – to the Senate Finance Committee. Leaving aside the technicalities, this “co-operation” by Fidelity makes it possible for investors to get most of the benefits of investing in Canadian mutual funds (although they will in some cases have to pay tax on money they have not received). It’s important to note that this does NOT give Canadians with “U.S. taint” the same benefits as other Canadian residents (they will still have to pay tax on distributions they do not actually receive). But, it will allow them to avoid the confiscatory effects of the S. 1291 rules.
These actions by MacKenzie and Fidelity will force the other fund companies to follow.
Highlights from the Fidelity announcement include:
Fidelity is helping investors comply with U.S. PFIC tax rules
Fidelity knows there is concern among investors about the U.S.Passive Foreign Investment Company (PFIC) rules and is taking a leadership position in the industry by making this option available to Canadian investors who are classified as “U.S. persons” under U.S. tax law. These rules could significantly affect “U.S. Persons” who hold Canadian mutual funds, so we are working hard to provide you with all the available information about these complex rules.
We believe it is important for those who may be affected by these rules to have the knowledge necessary to make informed decisions. However, we also believe that investors affected by these rules should not make changes to their Canadian holdings without first speaking with their advisers and a U.S. tax specialist.
Fidelity will provide PFIC Annual Information Statements for all of our mutual funds for the 2013 tax year. We expect to be able to provide PFIC Annual Information Statements for those funds prior to the April 2014 U.S. tax reporting deadline for individuals.
This appears to be a response (at least in part) to the new FATCA reporting requirements on individuals which require that mutual funds be reported to the IRS.
Conclusion: By serving the IRS, the Canadian mutual fund companies are serving their customers.
Cross-posted from citizenshipsolutions.ca
I really feel sorry for Norway and the Netherlands.
Why More Americans Are Renouncing U.S. Citizenship
They all generally agree on the facts of the situation. Even so, there is very little pressure to change it. As one Senate staffer pointed out, nobody in Congress represents overseas Americans. And government officials think this law is succeeding at catching the tax cheats.
That may be worth the side effect of losing a few thousand American citizens every year.
Via Ari Shapiro, International Correspondent, London
Funds Europe reports on the decision by UTI International (Singapore) to “remove” its American investors because of FATCA’s compliance burden:
http://www.funds-europe.com/news/13346-we-had-to-exit-americans-because-of-fatca-uti-international
UTI International (Singapore) chief executive officer Praveen Jagwani says the asset manager had to remove American investors because of the compliance burden Foreign Account Tax Compliance Act (Fatca) brings.
The regulation requires financial institutions to use enhanced due diligence to identify US citizens that have invested in either non-US financial accounts or non-US entities.
Fatca, which will become effective this year, was launched with the intention to keep US citizens from hiding income. Asset managers face severe consequences if they fail to enter an agreement with the Internal Revenue Service.
The intent behind Fatca is to keep US persons from hiding income and assets overseas.
Speaking at a recent Funds Global Asia roundtable in Singapore, Jagwani says Fatca is the single most difficult act of regulation for the asset management industry.
“We offer a Guernsey-domiciled Indian equity fund and because of six American investors, our compliance cost has gone up significantly,” Jagwani says.
“In order not to penalise the remaining investors, we have unfortunately had to decide to exit the American investors.”
UTI International is a subsidiary of one of India’s largest asset managers, UTI Asset Management Company.
Margaret Harwood-Jones, managing director and global head of investors and intermediaries, Standard Chartered, another roundtable participant, says there is no place in the world where businesses can hide from the impact of any foreign regulation.
“Even when it is only half a dozen investors buried somewhere in a particular fund, they have to be fully identified and properly treated in order to comply with Fatca,” Harwood-Jones says. “The obligation to report, to comply with the plethora of new regulation is important yet onerous indeed.”
