— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 10, 2014
To go directly to our submission to Canada’s Department of Finance on Canada’s FATCA IGA click here.
As you are aware of February 5, 2014 the Government of Canada signed an FATCA IGA with the United States Treasury. The agreement obligated the Government of Canada to change certain laws in Canada to assist the Government of the United States in locating “U.S. persons”.
Canada’s Minister of National Revenue, Kerry-Lynne D. Findlay, confirms in an email to a constituent, that the agreement was for the purpose of assisting Canada’s banks. The text of her email includes:
While FATCA was enacted by the U.S. government to promote U.S. tax compliance, it has raised concerns in Canada among dual Canada-U.S. citizens and Canadian financial institutions. If the Canadian government had not signed the intergovernmental agreement, non-compliance with FATCA could have subjected Canadian financial institutions and their account holders to sanctions, including special U.S. withholding taxes on payments to them from the U.S. Also, compliance with FATCA would have forced Canadian financial institutions to report information directly to the IRS, potentially violating Canadian privacy laws.
She then reminds her constituent that the U.S. imposes taxation based on citizenship. She advises compliance with U.S. tax laws and includes information about the Streamlined Compliance program.
As you are aware, the U.S. uses citizenship as the basis for taxation while Canada and most of the rest of the world use a residency-based approach. I understand that this situation creates unique challenges, including compliance burdens for U.S. citizens who reside in Canada or elsewhere in the world, even when they do not owe U.S. tax. Please note that the U.S. citizenship-based tax system has been in place for many years and is not altered by the recently signed intergovernmental agreement under the Canada–U.S. tax treaty.
The Canada Revenue Agency (CRA) administers taxes and benefits only in Canada. Therefore, it encourages U.S. taxpayers looking for information on their U.S. tax obligations to visit the U.S. Internal Revenue Service (IRS) website at www.irs.gov and read its guidance on the streamlined filing procedures for non-resident U.S. taxpayers at www.irs.gov/uac/Instructions-for-New-Streamlined-Filing-Compliance-Procedures-for-Non-Resident-Non-Filer-US-Taxpayers .
To it’s credit, at the time of signing the FATCA IGA, the Department of Finance invited the general public to submit comments on or before March 10, 2014.
University of Toronto Professor Dr. Stephen Kish and I have combined our energies to write a comprehensive submission on Canada’s IGA.
Our communication included:
March 10, 2014
Tax Policy Branch
Canada Department of Finance
Enclosed please find PDF and and Word attachment versions of a proposal by John Richardson and Stephen Kish to Canada Finance entitled “Request for changes in legislative proposal to establish IGA between U.S. and Canada for the enhanced exchange of tax information.”
Mr. Richardson and I hope that you will find the comments to be useful.
Barrister and Solicitor,
Stephen Kish, Ph.D.
Professor of Psychiatry
University of Toronto
We welcome your comments on this submission We worked hard on it.
You will find our specific recommendations in Section O of the submission starting on page 64.