This summer, major portions of the controversial US Foreign Account Tax Compliance Act come into effect. What will it mean for Canada? We met with Professor Allison Christians of McGill University to talk international tax, individual privacy, and national sovereignty.
While we’re at it, everyone should go and download Allison Christian’s law articles and put her on the scholarly map (her ranking increases with more downloads):
In the early 1900’s, the Black Hand was a type of extortion racket that involved sending a threatening letter to a victim and demanding a specified amount of money to prevent the threats from being carried out. According to an article published in the New York Times on March 26, 1910, famous tenor Enrico Caruso paid $1500 – $2000 to the Black Hand to “purchase peace for himself”. Despite the payment, Caruso continued to receive letters in which he was threatened with every conceivable kind of bodily harm unless he promptly paid more. That is the problem with acquiescing to the demands of an extortionist, you are identified as an “easy mark” and leave yourself susceptible to future acts of extortion.
The Criminal Code of Canada states in section 346(1): Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.
Dear xxx:
You keep sending me the same message. I am not sure why since the answer to your rhetorical question is obvious – FATCA does affect all people living in Canada who were born in the USA and retain their citizenship or never had it taken away.
Regards,
Jim
James Turk
David Robinson
James Turk <turk@caut.ca>
David Robinson <robinson@caut.ca>
———————————–
Date: 02/05/2014 02:42PM
Subject: This CAUT member wants an answer.
Under the agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) will be reported to the Canada Revenue Agency (CRA). The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. Tax Convention. This is consistent with Canada’s privacy laws.
http://www.fin.gc.ca/n14/14-018-eng.asp
Jim, tell me again how FATCA doesn’t affect the hundreds (thousands) of CAUT members that were born in the USA?
UPDATE: Well, crap. I think Pacifica just blew this post out of the water with her comment below.
Saturday evening we enjoyed the annual fund raising dinner of the Georgetown Rotary Club of which my father-in-law is a member. Before the meal, we sang the Canadian national anthem. I found myself fighting back tears. The Harper’s government signed an Inter-governmental agreement to betray banking information to the IRS of US citizens living in Canada, thus enforcing FATCA, an extraterritorial law made in Washington–a law which claims global jurisdiction over bank account information. Since many of these so-called “US citizens” are Canadians living on Canadian soil, they are part of that collective nation we call “Canada”. “True patriot love in all thy sons command!” Yet clearly, the current elected leaders have cynical intentions: money is more important to them than protecting Canada as “the True North strong and free”. I sang with a heavy not a “glowing heart” as I see Canada’s sovereignty weaken and her freedom diminish.
“From far and wide”, means that Canada consists of every citizen who lives within the borders of this country, from Atlantic to Pacific.
In response to her being mentioned in an article in the Globe & Mail (major Canadian newspaper), Green Party leader Elizabeth May submitted the following letter, published February 14:
Acts of renunciation
Re Citizenship For Sale (letters – Feb. 12):
I am not a dual citizen. I am a Canadian citizen and have been since 1978. Any doubt about citizenship is resolved in swearing the oath to Her Majesty the Queen in becoming a Member of Parliament. The U.S. accepts such acts as renunciation, lest there be any doubt.
Elizabeth May, O.C., M.P., Sidney, B.C.
I have no idea why she cites the oath she made on taking her seat as an MP. The wording of that oath is substantially the same as the citizenship oath.
Oath on taking office as MP:
I, [name], do swear that I will be faithful and bear true allegiance to Her Majesty Queen Elizabeth the Second, Queen of Canada, Her Heirs and Successors. So help me God.
Citizenship oath:
I swear (or affirm) that I will be faithful and bear true allegiance to Her Majesty Queen Elizabeth II, Queen of Canada, Her Heirs and Successors, and that I will faithfully observe the laws of Canada and fulfil my duties as a Canadian citizen.
I think I know what you want me and others to believe, with your “political-talk” statement. It is time for you now to be completely transparent with all, including MPs who may be giving their constituents dangerous information in saying things like “You have nothing to worry about.”
The OECD has released its “Common Reporting Standard,” a.k.a. a global “Standard for Automatic Exchange of Financial Account Information.” The plan more or less tracks the so-called “intergovernmental agreements” (IGAs) that the US Treasury is using to try to get the Foreign Account Tax Compliance Act working. But the OECD’s model for the world differs in two critical respects:
1 it is based on the global standard of residence-based taxation
2 it would require reciprocity
Readers of my prior work (on soft law, on the OECD’s norm-creating role, and on its grappling with the issue of sovereignty) will know that I am cautious about the premise of accepting proclamations of the OECD about “global” tax norms.
In the case of residence-based taxation, however, this is not an OECD-created norm but one that dates to the very beginnings of modern income taxation and while flawed is the best available structure if more than one country in the world is going to have an income tax and people are going to be allowed to leave their countries freely if they so choose. Relax either of those assumptions and legal status-based taxation might become technically feasible, though it would still be fundamentally unjust. Neither is the reciprocity norm an OECD invention: instead, its roots trace back to post-Westphalian fundamental international legal principles.
The OECD’s forging ahead with a plan that more or less relies heavily on US acceptance is eerily reminiscent of the last OECD attempt to curb tax evasion, via the harmful tax practices initiative. The US first supporting and then completely reversing course eviscerated that effort, thus cementing the status quo we witness today.
US exceptionalism with respect to who should be considered its residents and what it can be compelled to share with other countries cannot help but perpetuate a grave reciprocity imbalance that will only be exacerbated if the US does not sign up to the OECD standard, and the OECD accepts a carve-out to accommodate it.
Given that efforts toward a repeal of FATCA and an ongoing legal challenge to data reporting by US banks are currently unfolding in the US, the OECD’s report comes at an interesting juncture in the process of picking up where the harmful tax practices project left off. It could unfortunately foreshadow a repeat of the events that unfolded in that project circa 2001. Or, more optimistically, it could be that the OECD report is a means of giving the US a reason and the political cover to bring its antiquated status-based tax regime up to date with the global residence-based standard, and its one-sided view of the value of data sharing in line with how the rest of the world views things. That would make global automatic data exchange of offshore financial accounts a much more clearly positive development overall, leaving room to focus on solving the other outstanding issues. Only time will tell which way this will unfold.
http://taxpol.blogspot.ca
@Mopsicktaxlaw Liked ur post http://t.co/zX4dOZ9HWe #FATCA #FBAR r the expression of a tyrannical gov. U know FBAR was never related to tax
— U.S. Citizen Abroad (@USCitizenAbroad) February 14, 2014
@Mopsicktaxlaw "When people fear the gov there is tyranny, when gov fears the people there is liberty" What's happening in America today?
— U.S. Citizen Abroad (@USCitizenAbroad) February 14, 2014
I am a fan of Mr. Mospick and his blog. Mr. Mopsick has done much to reveal the injustice of citizenship-based taxation. He has publicly stated his opposition to “citizenship-based taxation”. For this he deserves credit. His latest post, although ostensibly about FATCA, reveals much more. He confirms the erosion of privacy and the “one world” agenda of FATCA.
My letter to CARP: (please feel free to edit as you like and send to whoever you like)
Some politicians have used the very myopic argument that USA has the right to determine its own taxation rules. Of course it does, so does Canada, but does USA have the right to impose US taxation rules on Canadian citizens living in Canada who have never earned a dime of US source income? Even if you think so, and I can’t imagine why anyone would, does USA have the right through its taxation laws to prevent some Canadians from effectively planning and saving for their retirement?
This is what FATCA in combination with USA’s unique to the world citizenship-based taxation laws will do to Canadians and their families where one family member is deemed to have ‘US person‘ status.
