Possible window into Flaherty’s current IGA bargaining position

I wrote a lengthy letter to Jim Flaherty in late August concerning the FATCA IGA negotiations. Today, I finally received by email a signed reply from Flaherty. The reply is essentially an update from his letter back in November, 2012 which many of us have received and which has been posted elsewhere on this website, I believe. It included a one-page advisory on what forms US citizens living in Canada are supposed to file, according to the IRS, which advisory repeats the earlier statement that CRA will NOT collect non-filing penalties, nor tax liabilities incurred by persons who were Canadian citizens at the time of the liability, no matter whether they are dual citizens of the US and Canada.

What is new, however, are the following paragraphs:
Flaherty Oct 2013

My understanding of the reference to the Income Tax Convention (aka the joint tax treaty) is that it refers to the exchange of information of, e.g., US residents who have accounts in Canada, and vice-versa. Those, as we know, are the REAL potential “tax cheats” and the REAL “offshore” accounts. The insistence throughout the rest of the letter in referring to the tax treaty provision of non-collection on Canadian soil against Canadian citizens (though not protecting non-Canadian-citizen residents), suggests to me the probable current focus in the negotiations. But it sounds to me like our government is remaining firm on that point.

Please note that a careful reading of the letter and attachment (parts which haven’t changed since last November, as far as I can see) are that, while tax liaibilities per se (e.g., taxes owed following a 1040 filing) may be collected against US residents in Canada who are not Canadian citizens, no penalties pertaining to non-filing for forms (specifically FBAR, which is named in the attachment) will be collected by CRA against anyone, Canadian citizen or not. The mention of the non-collection of filing penalties for FBARs PRECEDES the reference to non-collection of liabilities incurred by persons who were Canadian citizens at the time, so my reading is that the use of “citizen” rather than “resident” or just “Canadian” is specific to actual tax liabilities, rather than filing or non-filing penalties.
Flaherty letter attachment

I’m not a lawyer (just someone with a couple of decades of professional experience carefully reading legislation and regulations, sometimes under legal guidance from QC legal counsel). Don’t take this to the bank, but I do find this encouraging for at least the persons about whom I personally am most concerned (people who don’t consider themselves to be US citizens, do not reside there, receive no benefits or services from the US, have no US income or property, and have done nothing to “exercise” or even claim US citizenship, regardless of what the US government thinks of them because of the accident of where they were born).

If the principle mentioned in the above quote from the latest letter, coupled with the principles already in the joint tax treaty re tax liabilities, do form the basis of an IGA, personally I would have no objection (depending on what else is in the treaty, of course).

How this all sorts out remains to be seen, of course. But I thought I should call your attention to those latest paragraphs, in the clip above, which I’ve not seen before.

By the way, on the same day I sent the same letter (separate copy, not a cc) to Mulcair, Trudeau, and my own MP.  It’s now more than four weeks and none of the SOBs has even sent a robo-acknowledgement of receipt, never mind a reply.  I did get a robo-reply by mail from the Finance Correspondence office a week or so after I sent the email; I can understand that Flaherty and Finance wanted to mull things over before saying anything more about the negotiations.  But Mulcair, Trudeau and Dewar don’t have that excuse.

It’s a pretty sad commentary on parliamentary democracy when my own MP, and the leader of the party in which I had a paid membership until very recently, won’t even deign to answer my emails or acknowledge they got them.  I’ll remember this on election day (and also the excellent Town Hall meeting that Elizabeth May held here in Ottawa last night, which I attended — Deckard asked a question about FATCA, and May basically said she hasn’t heard any more than we have about how the negotiations are going — but she did briefly describe what the US is trying to do, and audience members who obviously hadn’t heard about it yet, were gasping).

This entry was posted in FATCA on by .

About schubert

I've had a CLN (Certificate of Loss of Nationality of the United States) since 1976, quite by accident (DOS mailed me one after I wrote a long anti-US letter to Henry Kissinger on July 4, 1976, telling him I'd become a Canadian citizen several months earlier and why, then confirming on a form I got in the mail that I had done so willingly - duh! - and with the intent of relinquishing my US citizenship). I filed the CLN away and forgot about it until August 2011 when I first heard about FATCA and FBAR and realized I needed to find the proof I am not an American in spite of my birthplace. My wife, who came to Canada with her ex before I did and also became a Canadian citizen, believed she'd thereby lost her US citizenship but didn't write Kissinger, didn't know anything about CLNs or the need to get one (nor did I at the time), and applied for a relinquishment CLN a few months ago. Until August 29, 2012, we were waiting to get her CLN, and it has been in her interests that I'm monitoring and occasionally participating in this and the IBS website. However, joy of joys, wonder of wonders, my wife's CLN arrived in the mail on that date, so now we both have CLNs. I will continue to monitor and contribute to this website as I have time and when I think I have something constructive to add, but after 12 months of Hell we're going to get our sanity and lives back, and that means a prolonged vacation from anything related to CLNs, IRS, FATCA, or any other such crap, unless it rears its head and threatens Canada and Canadians to the point where I have to come out of my corner fighting again ...

18 thoughts on “Possible window into Flaherty’s current IGA bargaining position

  1. badger

    Found on the web:
    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’

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Optionally add an image (JPEG only)