This is the 5th of seven posts analyzing the “dual citizen exemption” to the S. 877A Exit Tax which is found in S. 877A(g)(1)(B) of the Internal Revenue Code. Please remember that the “dual citizen exemption” is available ONLY to those who meet the “five year tax compliance test”.
1. What is the S. 877A(g)(1)(B) “dual citizen exemption” and why does it encourage those “born dual citizens” to not renounce U.S. citizenship?
2. The history of Canada’s citizenship laws: Did the 1947 Canada Citizenship Act affirm citizenship or “strip” citizenship and create @LostCanadians?
3. The S. 877A “dual citizen” exemption – I was born before the first ever Canada Citizenship Act? Could I have been “born a Canadian citizen”?
4. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act – Am I still a Canadian or did I lose Canadian citizenship? (The “Sins Of The Father”)
5. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act and the requirements to be “born Canadian”
6. “The S. 877A “Dual Citizen” exemption: I was born a dual citizen! Am I still “taxed as a resident” of Canada?”
7. The S. 877A “Dual Citizen” exemption: “MUST certify tax compliance for the five years prior to relinquishment”
Bubblebustin, comments at the Isaac Brock Society:
Being a non-resident US citizen is never about making good decisions for one self – it’s about making the least-worst ones. The fact that I will never be subjected to the US exit tax as long as I remain US tax compliant may reduce the urgency to renounce, but also gives me one other thing to consider when making those least-worst decisions.
Interesting that Canada amended its Citizenship Act in 2009 to allow more people to claim Canadian citizenship partially in response to the Canadian border baby passport crisis in 2007:
…and the same year the HEART Act became effective.
Was I a “Canadian Citizen” at birth and/or Am I still a Canadian Citizen?
In the context of the 1947 Canada Citizenship Act, these are two distinct questions. For the purposes of this discussion I will consider only S. 5 and S. 6 of the 1947 Canada Citizenship Act which contemplates that somebody was born after January 1, 1947.
Canada Citizenship Act 1947
What the S. 5 and S. 6 of the 1947 Canada Citizenship Act collectively say is that:
S. 5 – grants citizenship based on registration – no registration then no citizenship
If born in wedlock outside of Canada and the father is a Canadian then the child is a Canadian provided that his birth is registered; or
If born out of wedlock outside of Canada and the mother is a Canadian then the child is a Canadian provided that the birth is registered
S. 6 – strips one of citizenship from S. 5 unless the retention requirement in S. 6 has been met – citizenship lost if retention requirement not met
But, even if the birth is registered under S. 5 (above) the child ceases to be a Canadian if he fails to assert his Canadian citizenship after the age of 21 …. (note that this requirement was tinkered with over the years …). Eventually the person simply had to be residing in Canada at the age of 24.
Born outside of Canada between January 1, 1947 and February 15, 1977? What were the rules on January 1, 1947 under the 1947 Canada Citizenship Act? Let’s consider the following examples …
- Born Outside of Canada and out of Wedlock to a non-Canadian father and a Canadian mother – S. 5 of the 1947 Canada Citizenship Act – Yes, provided the registration and retention requirement has been met.
- Born outside of Canada and in wedlock to a Canadian father and non-Canadian mother – S. 5 of the Canada Citizenship Act – Yes, provided the registration and retention requirement are met.
- Born outside of Canada and out of wedlock to a Canadian father and non-Canadian mother – S. 5 of the Canada Citizenship Act – No ((Note that in the Benner case the Supreme Court of Canada ruled that this distinction violated S. 15 of the Canadian Charter Of Rights And Freedoms.) This injustice, which meant that those born in the U.S. did NOT acquire dual citizenship at birth (think of the definition of “covered expatriate” of the S. 877A “Exit Tax” rules), was “fixed in the 2009 changes to the Canada Citizenship Act.)
- Born outside of Canada and in wedlock to a non-Canadian father and Canadian mother – S. 5 of the Canada Citizenship Act – No, the Canadian mother was NOT entitled to pass Canadian citizenship to the child. (This was changed in the 1977 Canada Citizenship Act.)
- Born Outside of Canada To A Canadian Father – Failed To Register As A Canadian Citizen Under S. 5 of the 1947 Canada Citizenship Act – No because of a failure to register the birth abroad
- Born Outside of Canada to A Canadian Father – Registered As A Canadian Citizen But failed to meet retention requirement in S. 6 Canada Citizenship Act – No because of a failure to confirm citizenship
'Border babies' face fight for Canadian citizenship https://t.co/MBVsfMuHqS – It's the old 1947 Canada Citizenship Act
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 16, 2016
6. Born Outside of Canada to A Canadian Father – Registered As A Canadian Citizen and fulfilled retention requirements of S. 6 Canada Citizenship Act – Yes, all the statutory requirements met
Here are some examples which demonstrate what happened to those who failed to meet the requirements of S. 5 and S. 6 of the 1947 Canada Citizenship Act.
- Mr. William Smith, whose U.S. birth was not registered in Canada
The Committee heard from Mr. William Smith, who was born in the United States in 1949. At the time of his birth, Mr. Smith’s parents were married and his father was Canadian. Three weeks after the birth, the family returned to Canada to live. Mr. Smith testified:
When we arrived at the border, on the train, Immigration’s only comment was, “Oh, you have a new Canadian”. There was no documentation of my entry into Canada. Somebody was representing Immigration at a border point during the entry of a child into the country, and something should have happened. Nothing did.
Apparently Mr. Smith’s birth abroad was never registered in Canada, which at the time was a requirement in order for him to be a “natural-born Canadian citizen.”
Mr. Smith completed all of his schooling in Canada and went on to live as a Canadian — working, paying taxes, voting in elections and being summoned to serve on the jury of a murder trial. He testified that throughout his life he believed that he had dual citizenship.
The news that he was not a Canadian citizen came as a terrible shock to Mr. Smith:
When I finally received a letter I was so blown away, it was like somebody shot the light out in a room and all I could see was red…
In addition, he lost his employment security because proof of Canadian citizenship is a requirement for the positions he seeks to hold. Mr. Smith told the Committee that the repercussions of not being a Canadian citizen have left him “financially destitute.”
- Ms. Barbara Porteous, who was born in the U.S. and was not aware of the requirement to retain her citizenship before age 24
Ms. Barbara Porteous describes herself as a Canadian even while, in her view, Canada says she is “a 70-year-old woman without a country.”
She was born to a Canadian father in Oroville, Washington in 1936. She moved to Canada in 1955 when she married her husband, a Canadian born in Canada. Upon entry into Canada, she received a letter and an immigration card identifying her status as a Canadian citizen. She told the Committee that the letter welcomed her and said, “Enjoy your new life in Canada,” but did not provide any information about the possibility of her losing citizenship.
In 1959, the Porteouses moved back to Washington State to work. At that time, the American consul issued a loss of nationality certificate to Ms. Porteous on the ground that she had taken an oath to Canada when she performed poll clerk duties in the 1957 Canadian federal election.
The family lived in the United States for six years before returning to Canada and settling in the Osoyoos region in 1965. For the past 42 years, she contributed to her community and her country. She was a census taker in 1995. She worked for Elections Canada as recently as 2003. She voted in every municipal, provincial, and federal election, as she felt that was her responsibility as a citizen. She and her husband have been married almost 52 years. They have three children, eight grandchildren, and one great-grandchild, all born and living in Canada.
In 2006, Ms. Porteous applied for a replacement citizenship card to facilitate applying for a passport. Several months later, she received a letter from Citizenship and Immigration that stated:
You ceased to be a citizen June 14, 1960, the day following your 24th birthday, as you were not residing in Canada on that date nor had you applied to retain your citizenship prior to that date.
As a consequence, she can no longer visit her extended family — sisters, brothers and friends, all in their seventies — to go golfing and do all the other things she did freely believing that she was a Canadian citizen these past 42 years. She stated:
Between Oroville and Osoyoos, my life has been 25 miles over the last 50 years… You have made me without a country. I have lived here illegally for 42 years? Are you going to want my pension back?… I have never been so disappointed in my country. I can’t believe it. I don’t know what the problem is… .
These injustices were the reason for the 2009 changes to the Canada Citizenship Act which granted “Lost Canadians” citizenship from birth.
Waking up Canadian – 2009 Changes to Canada's citizenship laws – many people became Canadian citizens from birth https://t.co/34N3aPlX8V
— Citizenship Lawyer (@ExpatriationLaw) February 15, 2016
Relevance to the “born dual citizen” exemption in the S. 877A Exit Tax Rules …
Under Canadian law, the 2009 Amendments corrected these injustices and conferred Canadian citizenship on those affected persons from birth.
Would the United States see it this way? Time will tell.