Purpose and introduction:

Prior to Canada’s implementation of FATCA on July 1, 2014, the Canadian parliament held hearings. The hearings took place over two days in May of 2014. I appeared as a witness on Mary 14, 2014. Excerpts from the testimony appear in the above video. What follows is a transcript of my opening statement. I think I would say the same thing today.

https://www.ourcommons.ca/DocumentViewer/en/41-2/fina/meeting-35/evidence

The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)):

I call this meeting to order.
This is meeting number 35 of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Tuesday, April 8, 2014, are the study of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.

Colleagues, we have two panels before us this afternoon.

In the first panel, we’re very pleased to welcome Mr. John Richardson, and, from the Canadian Bankers Association, the acting vice-president, Mr. Darren Hannah. From the Canadian Council of Chief Executives, we have Mr. Brian Kingston, and from the Office of the Privacy Commissioner of Canada, we have Privacy Commissioner Madam Chantal Bernier.

Bienvenue. Each of you will have five minutes maximum for your opening statement.
We’ll begin with Mr. Richardson, please.
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Mr. John Richardson (As an Individual):

“Thanks very much for the chance to appear today.

I did take the time to watch yesterday’s session, which was actually enormously helpful to me, as I’m sure it was to you. I have a couple of thoughts, though, that are my own but directly link to that. The signing of the FATCA IGA can be seen as either good news or bad news.

First, interestingly, is the good news. It’s the point that Professor Cockfield made yesterday. In fact, what this does ensure is that Canada is absolutely 100% in compliance, no ifs, ands, or buts about it. That’s what it means to have signed that agreement.

Interestingly, the agreement specifically states that nothing happens until Canada makes it clear that it has done all of the legwork needed to actually implement the agreement, which I would assume to be all of the enabling legislation that we find in Bill C-31. Given that’s the case, as Professor Cockfield pointed out, there’s absolutely no reason to rush this whatsoever, absolutely none. This should not be in the dark recesses of an omnibus bill. It should in fact be brought to see the light of day in a separate bill.

The second aspect of this that’s very interesting in the IGA itself—and this question was asked yesterday—is who this applies to. It applies to U.S. persons and is defined in the agreement as “U.S. citizens or residents”. Now, what is extremely significant is that U.S. citizens are defined solely by the United States today, tomorrow, and forever. That means that someone who is a U.S. citizen today might not be a U.S. citizen tomorrow—and I’ll have more on this as we continue the discussion—but given that the U.S. has the right to define who a citizen is, given that I presume Canada would cede that right to them, I think it’s extremely important, absolutely essential, under any FATCA agreement that the definition of a U.S. citizen could never, never, never include any Canadian citizen who is a resident in Canada.

Third, we’ve got the whole problem of what FATCA actually means. Having watched a few of these committees, I see a lot of technical discussion of FATCA and a lot of discussion of regulations. In other words, there’s a lot of talk about how to implement this agreement, but precious little on what it actually means in terms of the lives of Canadians, and precious little in terms of what it means in terms of the country itself.

The simple fact of the matter is that FATCA, once implemented, will allow the U.S. to put a permanent capital tax on Canada every day of every year for as long as this agreement is in effect, simply by virtue of using U.S. citizens in Canada to tax and siphon revenue out of the country. It is a myth, an absolute myth, and it is completely wrong that under U.S. tax laws, U.S. citizens will not owe tax to the IRS. This is for two reasons. The first is that the U.S. tax code is hostile to anything foreign, and that would include anything in Canada in general, but secondly, anything that involves tax deferral, and it is plainly obvious that all of the pillars of Canadian retirement planning do in fact involve tax deferral.

So it is a myth that U.S. citizens would not owe tax. It is a myth. Interestingly, as I read in something yesterday, the opposite of truth is not the lie: the opposite is in fact the myth. This agreement will have severe consequences for Canada and Canadians.”

What follows is a pdf version:

FINAEV35-E

Here is the video:

https://parlvu.parl.gc.ca/Harmony/en/PowerBrowser/PowerBrowserV2?fk=8332857

A trip down memory lane!

John Richardson – Follow me on X.com @ExpatriationLaw