Typical investments — the kind the average person makes in planning for a sound financial future — can be rendered pointless or even have disastrous financial consequences due to US taxation of US Persons on income they make in their home country as well as siphoning non-US income out of that country and into the US.

This paper provides concise information on how tax-deferred accounts, mutual funds, and capital gains on the sale of one’s home result in taxes owed to the US.   Useful to whip out if anybody tries to tell you that US extraterritorital taxation is no big deal.

Thanks to LM’s hubby, its author.

Assets That Will Likely Result in Net Taxes Paid to the US by US Citizens in Canada Who File Tax Returns in the US and Have Only Canadian Source Income

Read it and Weep… What is REALLY in the Canada-U.S. Tax Treaty https://t.co/5MU3tcvfst

— Patricia Moon (@nobledreamer16) April 1, 2016

The current version of the The Convention Between Canada and the United States of America was signed September 26, 1980.

Since then, there have been 5 protocols to amend the Treaty: 2nd-June 14,1983; 3rd-March 28 1984, 4th-July 29, 1997 & 5th-September 21, 2007.(dates signed)

In Canada, a treaty is not approved per sé by the Parliament. This was somewhat of a surprise to me, due to witnessing the recent chain of events with the signing of the IGA on Feb 5, 2014, watching the (limited) debate process leading up to Royal Assent on June 19, 2014. Given the fact it was very clear the CONs intended to approve it, I had no idea that all they were doing was dealing with the implementation of it. It appears that Canada treated the IGA as if it were a Treaty:

Canada’s Approach to the Treaty-Making Process

After signature of an international treaty, once Canada is ready to be bound by it, a document is prepared establishing that the formalities for the coming into force and implementation of the treaty have been completed and that Canada agrees to be bound by the treaty. More formally, Cabinet prepares an Order in Council authorizing the Minister of Foreign Affairs to sign an Instrument of Ratification or Accession.13 Once this instrument is deposited with the appropriate authority, the treaty is officially ratified. At this point, Canada is bound by the treaty as soon as it comes into force (if it is not already in force).14
In January 2008, the federal government announced a new policy17 to enhance parliamentary involvement in the process by ensuring that all treaties between Canada and other states or entities are tabled in the House of Commons before ratification. The Clerk of the House of Commons distributes the full text of the agreement accompanied by a memorandum explaining the primary issues at stake, including subject matter, primary obligations, national interests, policy considerations, federal-provincial/territorial considerations, implementation issues, a description of any intended reservations or declarations, and a description of consultations undertaken. The House of Commons then has 21 sitting days to consider the treaty before the executive takes action to bring the treaty into effect through ratification or other preliminary measures, such as introducing legislation. The House has the power to debate the treaty and to pass a motion recommending action, including ratification; however, such a vote has no legal force.
 

One thing that this demonstrates is that Canada most definitely was in compliance with the terms of the IGA on the day it was signed. I am not sure this was known by some members in Parliament. There simply was no need to rush the implementation of the IGA. Why the big hurry? Yet the CONs did this in spite of recommendations to spend more time (as per Prof. Allison Christians, Prof. Arthur Cockfield and John Richardson).

Remember this?
 

Murray Rankin: Mr. Richardson, in your remarks, you say there’s no reason to rush this through, yet you’ve heard from Mr. Hannah that there would be problems with the 30% withholding tax and the access by banks to the foreign capital markets in the United States. What’s your response to that?

Mr. John Richardson: He’s completely wrong. The obligation is satisfied upon entering into the IGA. That has been done. The agreement states very specifically that it doesn’t take effect until Canada gives notification.

Continue reading →

 
A gripping eight-page feature story appeared in the 29 Feb-6 Mar 2016 issue of Bloomberg Businessweek (50-57). The main theme is the wranglings to save the near-extinct South China tiger. The account includes an interesting sidelight paragraph on how protagonist Stuart Bray has abandoned his U.S. citizenship.
 

Born and raised in America, he lives in London and maintains Belgian citizenship. A former executive at Deutsche Bank, his natural habitat is Wall Street or the Square Mile of London, where he spent a career in structured finance.

 
From the following passage, it appears that Bray has put his tax motivation on public record — and himself square in the crosshairs of the Reed amendment?

Just when the project needed it most, there was an unexpected windfall. While Bray was fighting with Deutsche Bank over his options, the bank put out a news release. Bray claimed that it implied his old division was caught up in a U.S. tax probe, which wasn’t the case, and he sued for libel. The suit, along with the stock dispute, was settled out of court. In 2009 he arranged for Deutsche Bank to pay £20 million to a Save China’s Tigers charitable trust as a tax-free donation. The same year, Bray gave up his American citizenship and became a Belgian national, saying he didn’t want the organization to face onerous U.S. taxes.

To keep this simple:

1. Yesterday we have a post making an attempt to quantify (what we all know) is that the United States is using citizenship-taxation” as a tool to extract capital from other nations.

2. We have had a number of posts which reinforce that the Government of Canada has agreed to the imposition of FATCA in Canada. FATCA is the tool to enforce U.S. “citizenship taxation” and is therefore the tool to extract Canadian capital to the United States.

My question is: How can Canada both agree to FATCA and allow U.S. citizens to reside in Canada. U.S. citizens in Canada are being used by the United States as “Weapons of Mass Extraction” (WMEs).

Yesterday, I commented in relation to the cost to the Canadian economy of having “U.S. persons in Canada”:

This is a brilliant piece of work. But, if I may suggest this …

As all economists know, there are:

1. Actual costs (what is detailed in this research);

2. Opportunity cost (the lost of economic opportunity had this capital not been stolen from the Canadian economy).

The “opportunity cost” is likely to be far greater.

This study should be circulated far and wide.

U.S. citizenship is a problem for countries the world over. Canada is particularly affected by this problem. How should Canada deal with the problem? What is the solution?

The best solution is NOT an annual payment of tribute to the USA.

The best solution (assuming there is any payment) would be a one time payment to simply purchase those Canadians affected by this form of U.S. Slavery. Let’s get real here. This is about “buying back the slaves”. But, the purchase should include ONLY those who are Canadian citizens. Those who are U.S. citizens only should be deported from Canada.

A week ago there was an article in the Canadian media about how a professor’s family could not stay in Canada because of the probability that he might impose a burden on Canada’s health care system.

http://www.cbc.ca/news/canada/toronto/programs/metromorning/costa-rica-down-syndrome-1.3489120

I can’t understand how somehow it’s okay to not allow this family to stay because they would be a drain on Canada’s health care system but allow U.S. citizens to live in Canada.

This study is a quantitative expression of what we all know:

“U.S. persons in Canada” are nothing but Trojan Horse soldiers who exist only to damage to the Canadian economy. Yet Governments in Canada and around the world are either so “willfully blind” or so stupid that they can’t see this basic truth.

I ask the authors of this study to continue their fine work and consider how much the Trudeau Liberals should offer to pay the United States for a permanent “buy out” of those who the U.S. considers to be its property in Canada.

Would the methodology for the calculation be based on both (1) the actual cost of the leakage and (2) the opportunity cost of having the money remain in Canada (3) the cost of impoverishment as detailed in Karen’s comment above?

I once again ask the questions:

1. How can any country both agree to FATCA and allow “U.S. persons” to live in that country?

2. Should the Government of Canada offer the United States a ONE TIME buyout and if so how much should that be?

cross-posted from Citizenshipsolutions dot ca

For Americans, tax season gets even more stressful when they leave the U.S. https://t.co/u58zQy2LmF via @business quotes @Kred65

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) March 30, 2016

Yesterday I was forwarded an email which originated from the U.S.
Consulate in Toronto. The purpose of the email (included at the end of
this post) was to give notice of U.S. tax obligations for U.S. citizens
living outside the United States. In other words, the State Department
is assisting the IRS by notifying Americans abroad of their U.S. tax
filing obligations. Put another way, this email represents:

“Tax Education Outreach” from the IRS delivered by the State
Department”

I do NOT recall this in previous years. That said, this email
notification is extremely significant. It means that the IRS can argue
that those who received this email may well have had notice that they
were required to file U.S. tax returns. Over time, this will increase
awareness of U.S. tax filing obligations. The greater the increase in
awareness of U.S. tax filing obligations, the harder it will be to claim
ignorance of those obligations. (This is in addition to the “Educational
Outreach” coming in the form of FATCA letters from your local bank and your friendly
journalists. In both cases, you are being asked to consider the question
of: “Are you or have you even been an American
citizen?“) Although, this is NOT an immediate problem, it seems
logical that sooner or later it will become more difficult for Americans
abroad to claim ignorance of their U.S. tax filing obligations. This may
have implications for coming into U.S. tax compliance.

Q. Who would have received this email from the U.S.
consulate?

A. Anybody who is on the U.S. Consulate email list.

Q. Who would be on the U.S. Consulate email list?

A. It would include almost anybody who has applied for a U.S. passport.

To put it simply:

One who applies for a U.S. passport is now putting oneself in a
position where one will be told about U.S. tax filing
obligations. Since most Americans abroad need a U.S. passport,
it stands to reason that those who apply for a U.S. passport are
creating a situation where they will be told about U.S. “taxation based
citizenship”. You can see where this is going.

This appears to be the next step in the progression that
includes …

Continue reading →

A paper detailing the Costs to Canada of the FATCA Agreement has been compiled and is now available. One of the two co-authors is a retired professor of economics at McMaster University. A separate document showing how the Average Annual Tax Payment was derived is also available.

This paper provides useful support for Brockers interacting with Members of Parliament as well as important information for journalists.

Here is the introductory paragraph:

This presentation is constructed to demonstrate the amount of money destined to leave Canada ANNUALLY as a direct result of compliance with the United States Foreign Account Tax Compliance Act (FATCA) regime. This money, instead of circulating in the Canadian economy, being invested to benefit Canadians or remaining in Canadian savings accounts for the future financial security of Canadians, will be paid directly to the United States Treasury where it will benefit THAT country’s residents. Another scenario is that it will be paid into the US Treasury and disappear as a meaningless footnote in the attempt to pay down its impossible multi-trillion-dollar debt.

Read this article from the National Post, then please consider volunteering as a witness in our Canadian lawsuit. If interested, contact me at: stephen.kish.chair@adcs-adsc.ca

From the article (in which our Plaintiffs Gwen and Ginny are mentioned):

“No one was clearer about his qualms about this agreement than now-Prime Minister Justin Trudeau, who wrote in a pre-election letter that, “The Government of Canada has a responsibility to stand up for its citizens when foreign governments are encroaching on their rights. We believe that the deal reached between Canada and the U.S. is insufficient to protect affected Canadians.” etc. etc.

Continue reading →