Canadian Investment Executive and Canadian Bankers Association Preparing for FATCA

Are you panicking about FATCA?  Are you looking for a “helping hand” because you are “in need of advice and reassurance?”

Coming Soon: Canadian Investment Executive to Your Rescue!  

Investment Executive Encourages Canadian Investment Advisors to help you come to terms with your obligations to a foreign government.

As is usual, there is no mention of Canadian Protections from IRS. There is no mention of Canadian laws or Canadian Charter of Rights and Freedoms. There is no mention of the possibility of a getting a CLN because you may have relinquished when you became a Canadian citizen. 

Instead, to help you out, Investment Executive recommends back filing US taxes. They say:

“They’re often extremely upset, frustrated and angry.”

Ya’ think?!?

Meanwhile, over at Brock, Canadian Bankers Association has once again told how strongly they have advocated on our behalf (which is mainly their same old hymn about the administrative and financial burdens to banks).

CBA’s advocacy is now refocused:

In Ottawa, we have raised concerns with officials from the Department of Finance, the Minister of Finance and the U.S. Embassy. Finance Minister Jim Flaherty has supported our position and expressed his own concerns publicly and we appreciate the support from the Minister and his officials.

Unfortunately and despite worldwide efforts, U.S. officials have no intention of repealing FATCA. So, governments around the world have decided that developing bilateral intergovernmental agreements (IGAs) with the U.S. is the best way to ensure that the domestic rights of their citizens are respected while still sharing relevant taxpayer information bilaterally. Once the Canada/U.S. IGA is finalized, it will be reflected in Canadian tax law and financial institutions will have to abide by these requirements.

We believe this is the best approach and support the government’s actions because the alternative would potentially expose Canadians to punitive U.S. withholding taxes on income from their investments, including retirement income. The IGA should avoid that and ensure that Canadian law is respected. Until the IGA is made public, we won’t know exactly what the final requirements will be for financial institutions and their customers.

So, there you have it. CBA wants an IGA that will allow them to sell out their long time customers to a foreign government.   We need to keep the pressure on Flaherty and Finance Canada to ensure our rights as Canadian citizens and residents are not compromised.

By the way, CBA continues to refuse to advise how they will determine who was born in U.S.

 

 

 

 

15 thoughts on “Canadian Investment Executive and Canadian Bankers Association Preparing for FATCA

  1. Hello there! Would you mind if I share your blog with my twitter group?
    There’s a lot of folks that I think would really appreciate your content.
    Please let me know. Thank you

  2. FATCA, course, is connected to the HIRE Act.

    http://pro.stansberryresearch.com/1310PSIEANEW/LPSIQ126/?h=true

    The US economy is such a mess that the only things they have left to export beside surplus food are there laws.

    The investment analyst from the foregoing link is predicting that the US $ will lose its status as the world’s reserve currency on July 1, 2014. If he is right, the FATCA will have no teeth. It will be pointless. Note that Russia and China (both net creditor nations) are making their own deals on foreign trade. They have not signed FATCA either.

    Those clowns in the US congress and the White House will not be able to legislate their way out of this one. Of course, Canada, being so closely linked economically, will suffer too.

  3. @Hazy: There are many things that never occurred to the people drafting FATCA. That’s why it’s such a mess. No one thought anything through.

    One thing they did think through was the use of the term “US person.” They wanted it to be as broad as possible so they could nab as many people as possible.

    The Vice-President of my credit union said the U.S. is being “very clever” by using that term. I think that’s code word for “very sneaky.”

  4. The first draft FATCA regulations, issued in late summer 2010, included anyone in the world with a PO Box as a potential U.S. person. Thus the number of U. S. persons would now possibly be in the billions.

    Fortunately, this provision was dropped in the 2nd draft, when it was pointed out in comments, that in many places, people only have a box number. I guess this never occurred to the lawyers working on FATCA This may be one of the few suggestions for changes that was actually incorporated into the regulations.

    However, it’s still amazing how many people are considered to be U.S.persons, besides the obvious number of people resident in the Homeland.

  5. @Badger: Yep. The definition of US person is ever expanding.

    Now, it includes non-US fund managers with US clients for derivatives trading. How will Canadian banks and investment advisors feel about that?

    http://www.ft.com/cms/s/0/234b6984-31a1-11e3-817c-00144feab7de.html

    (Note, if you don’t have an account for Financial Times, you can sign up for one that allows you to read 8 articles over 30 days for free.)

    I don’t pretend to understand all the complexities of this, but I agree with two things in the article:

    “It’s very confusing” and “What is strange is the banks don’t know how to act…”

    Isn’t that the point? First keep everyone in the dark. Next, quickly overwhelm them with bizarre regulations. Then, declare them “US persons.” Finally, nail them with penalties and withholding.

  6. @Blaze, given the contents of that document, and US intransigence, it is obvious that the US means to beggar anyone who lives outside the US who it can define broadly as a ‘US taxable person’ – by preventing us from most of the avenues we have to save for our families and our future. That the Canadian registered accounts are not likely to be exempted from FATCA (in addition to them being still taxable ‘foreign trusts’ – excepting the RRSP- but only with an annual treaty election – is sickening. The US is apparently content to insist and argue that our Canadian child’s RESP or an RDSP are the evil tools of moneylaunderingtaxevadingdruglordterrorfundingcriminals. – while the IRS is offering US residents tax breaks on education savings plans as an incentive for Americans to invest in training and education, and many US residents pay no tax at all.

  7. Thanks Badger. Great find. Once again, not a word about the rights of Canadian citizens and residents.

    Yet, they all wonder why we don’t trust them to give us a “helping hand” of “reassurance.”

  8. Have a look at this:
    http://www.clhia.ca/domino/html/clhia/CLHIA_LP4W_LND_Webstation.nsf/page/06A7E6DA85F3446885257B34006CD347/$file/Joint_Comments_FATCA_IGA.pdf

    ‘Joint FI Industry Comments to Finance re FATCA IGA February11, 2013 The following comments include concerns identified by Canadian FI associations (CLHIA, CBA, IFIC and IIAC) with respect to the implementation of FATCA under a Canadian IGA.’
    ‘Adoption of a Risk-Based Approach for FATCA Implementation in Canada’

  9. @ArcticGreyling: Wherever CBA’s loyalty is, it isn’t with Canadian customers who simply had the misfortune to be born in United States of Arrogance.

    It’s important to remember the former US Ambassador to Canada, David Jacobsen was appointed Vice-Chair of Scotia Bank based in Chicago on completion of his term as Ambassador.

    http://business.financialpost.com/2013/05/21/bmo-taps-outspoken-u-s-ambassador-to-canada-for-vice-chairman-role/

    This is the same Ambassador Jacobson who said IRS wasn’t after “Canadian Grandmas.” Try telling that to the 68 year old disabled woman who wrote this letter. http://waysandmeans.house.gov
    /uploadedfiles/patricia_anderson_daddario.pdf

    Jacobson was a major fund raiser for Obama.

    The incoming U.S. Ambassador to Canada was also an Obama fundraiser. Any guess where he worked before? Partner at Goldman Sachs. Chicago.

    Then, of course, TD now has more branches in US than they do in Canada.

    Isn’t it apparent where their loyalty is?

  10. Does the CBA realize that capitulation on FATCA would probably not withstand a constitutional challenge?

    They think they must comply? Where is their first loyalty? Is it to Obama or to Queen Elizabeth?

  11. @Blaze,

    Banks, and government, will pay for their betrayal. If/when an IGA is signed, the backlash from 100′s of thousands of Canadians will be huge. Most of those affected do not yet have a clue about FATCA! Those of us here and at IBS are on the forefront, but soon will be joined by many, many others should the FATCA train keep rolling.

    Yet, there is still time to do an about face, and say NO to FATCA, and no to an IGA, and to figure out a way to play USA’s bluff. It can be done. James Jatras knows it, and has given suggestions on how to go about it. It is time for our government and the banks, to work together to stop this insanity, instead of just capitulating. Our forefathers must be rolling in their graves with disgust right about now.

  12. @Hazy I never said I thought CBA wanted FATCA.

    Fact is, they’ve done far too little to stand up for Canadians. They know how this is affecting us. Yet, their latest advocacy is for an IGA to allow our banks to throw us under the bus.

    It’s too late. They’ve betrayed me by sneaking around behind my back with my stalker and abuser.

    Did CBA ever once try to find a way of reaching out to and working with us to try to find a solution? Instead, they have constantly said they don’t like FATCA, but must comply.

    I personally contacted CBA several times. Not one response from me left me with the impression they cared about me as a Canadian citizen and a Canadian bank customer. Same with my contact with my bank where I have been a customer for 32 years.

    So, recently, I transferred a huge sum (at least a huge sum to me!) out. When my bank manager asked why, I said “Because I don’t trust you not to FATCA me.”

    The trust I had for 32 years is destroyed. I may keep small amounts there in chequing and savings for convenience, but I will never trust my bank or deposit large sums there again.

  13. I know it’s fashionable here and at Brock to diss the CBA and other industry groups, but the fact is that FATCA is not something they ever wanted. It has and will continue to create enormous costs for them and will eventually lead to strained relationships with some of their customers.

    I appreciate that CBA has chosen to engage with us at Brock, even though it’s a no win situation for them.

    However, it is still possible for the CBA and others to oppose FATCA at its source, namely the U.S. Congress.

    Personally, I would be much more comfortable if the CBA would show us clear evidence that they intend to lobby for the repeal of FATCA, to be replaced by a much more internationally developed and sensible approach to the problem of international tax evasion

  14. Shortly after I posted this here with a pingback at Brock, CBA posted more there. Here is part of CBA’s latest comment at Brock:

    We have made our concerns about FATCA known to the Canadian government, but it is now up to them to negotiate an IGA that will hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA. We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions.

    To address some of @LynneBlaze’s points raised here and on Twitter, the financial services industry has not capitulated and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming.

    You have also asked if banks and other financial institutions will ask all customers where they were born and what would give them the legal authority to do so. The requirements are unclear right now but we are expecting the details to be outlined in the IGA.

    CBA clearly cares little about their Canadian customers who a foreign government is trying to claim as their own.

    I asked CBA both at Brock and on Twitter how they would respond if China was making such outrageous demands? Eritrea?

    No response, so far. I wonder if asking it again here will get one. (I’m not optimistic).

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