Here are some interesting pieces from the news and from personal perspectives.
First is a CTV interview with Queen’s University law professor, Art Cockfield, who has spoken out before against FATCA. He makes the point that the Canadian government needs to be doing more “sabre rattling” over FATCA.
He also makes a point I don’t think I have heard before that he thinks FATCA is illegal under NAFTA (North American Free Trade Agreement.). So, we already know FATCA violates Canada’s banking, privacy and human rights laws and Charter of Rights and Freedoms. Now a law professor says it also is illegal under NAFTA. Why are we still having this conversation? Why doesn’t the Canadian government Just Say No?
Cockfield stresses, like others, that IRS is not going to find much revenue going after Americans in Canada and points to our 70 year effective tax treaty. Our friends is Switzerland will not like the comment he makes about Americans living in a tax haven like Switzerland.
Thanks Saddened for sending me the link to the CTV interview with Professor Cockfield.
Investment Europe is reporting FATCA Rules Could Cause Banks To Cut Back On External Asset Managers. Asset management is the main focus of the article. But, there is an interesting comment at the very end about the situation in Switzerland.
FATCA is already law in the US but negotiations are under way to enshrine it in national law of countries around the world. Jaeger was hopeful that some ‘carve-outs’, or exemptions, could be negotiated for pension funds and custodial banks in Switzerland. However, he thought the possibility of getting a foreign law accepted in a Swiss referendum was ‘unlikely’
I think getting a foreign law accepted in a referendum in any country would be unlikely. However, is a referendum planned for Switzerland?
iExpats is reporting Australia Is Ready to Join FATCA Tax Alliance. This seems to be a model similar to the Europe Five. However, the Europe Five model is dependent on “reciprocity,” which is still far from a done deal because US Bankers Are Fighting The IRS on “reciprocity.”
On a personal level, Victoria tells How I Really Feel About Citizenship Based Taxation. Actually, I suspect Victoria is being quite tactful and holding back from how she “really” feels.
And, here is an Israeli-American Couple’s Letter To IRS TAS. It continues to boggle my mind how people whose lives have been turned upside down continue to be so reserved and polite in their comments.
33 thoughts on “Canada, Australia and Switzerland–Who Will Hold Out?”
This doesn’t speak to our cross-border tax issues, particularly, but one very rational approach for Canada would be to tie FATCA acceptance. to some really aggressively negotiated trade concessions.
Canada: “You want this, right?”
Canada: “Want it really badly, right?”
Canada: “Well, that sucks.”
Canada: “Let’s talk about softwood lumber … “
Well, here’s another article, the US Law That is Destroying the World Economy. Gee, I wonder what that could be.
Here is a snippet from the article:
Congress has created the single greatest danger with FATCA, in bringing about a World Depression. This is up there with the Protectionism of the Great Depression that destroyed world trade back then. A repeal of FATCA legislation is so vital yet it of course will not take place. Just listen to the hatred of capital coming from the Democrats. This is the most Marxist election in history, and the Republicans offer no better alternative. We need statesmen – not politicians before they destroy everything.
July 18, 2012 – BC Government Online News Source declares, “Total victory for B.C. and Canada on softwood lumber”
The site states that about 53,000 people are employed in BC in wood products and associated industries.
I wonder how many people in BC are affected by FATCA?
I thought maybe I should be writing to the British Columbia provincial government instead of my own in Alberta, but a search on the website above for ‘fatca’ turned up nothing. Guess they’re not too concerned, either.
All in all a relatively good clip. Some have been asking for more detail about my thoughts on how this all plays out in the Canadian political agreement. While not a commonly held view I am of the opinion along with the likes of Paul Wells at Maclean’s Magazine that in fact while the Federal Conservative over the long term would like bring Canada in a more “conservative” direction unlike Mike Harris or Brian Mulroney they have little desire to pick a big fight or cause a lot of controversy on any one particular issue(Many initiatives Harper undertakes are on individual basis not even that conservative in many cases). In particular if any particular initiative they embark turns out to be too controversial they would rather drop it and wash their hands and move onto to something “else” to move their long term agenda forward. David Frum actually published a good column in the National Post describing this strategy compard to the prevailing wisdom in the US Republican Party.
Harper and the Conservatives are though facing a real problem in their strategy in that through policies such as FATCA, the Volcker Rule, and aspects of the proposed TPP and EU Free Trade agreements they are running into non negotiable demands coming from Canada’s larger economic partners. So they have the choice of going against everything they have done far domestically in Canada so and burn a lot of political capital surrending to foreign countries in areas such as FATCA, Supply Management, and Copyright(of which they will get nothing in return from the EU or US basically) or start a major conflict with both the EU and US over FATCA, Supply Management et all. The Conservatives also face the problem that they are starting to run out of time before the next election. Postponing politically difficult decisions to 2013 isn’t really going to help given the next election will be in 2015.
” The coming Canada-U.S. tax war”
The Globe and Mail
Last updated Thursday, Sep. 06 2012, 10:35 AM
…”Parliament should table legislation that renders the recent Obama legislation of no force and effect in Canada. Foreign governments should be entitled to a reasonable amount of financial information to help enforce their tax laws, but turning Canadian banks into a branch of the IRS goes too far.”…
” Arthur Cockfield, a law professor at Queen’s University, is the editor of Globalization and Its Tax Discontents: Tax Policy and International Investments . He testified about tax evasion and offshore bank accounts in February before Parliament’s standing committee on finance.”
@Badger: Thanks for posting that commentary by Professor Cockfield. I will post a permanent link to it.
Professor Cockfield makes the same point many of us have made. There is a long-standing tax treaty between US and Canada which shares information between the two countries on each other’s residents. That should suffice. FATCA should not be necessary here.
Professor Cockfiled also suggests Parliament table legislation that states FATCA has no force or effect in Canada. I am not a law professor, but it seems to me there is an easier solution. Supreme Court of Canada has already ruled revenue laws of a foreign country will not be enforced in Canad, either directly or indirectly. It seems to me we have all kinds of laws already–banking, privacy, human rights, tax and Charter. Simply tell the banks and the US government that Canadian banks must follow Canadian law and Canadian law will not be changed to accommodate a foreign government.
As OMG suggested at Brock a few months ago, Flaherty and Baird need to tell US “Canada does not negotiate with financial terrorists.” That should be the end of the story.
Here are some interesting quotes from Arab Times.
Scott Michel, a Washington DC tax lawyer says FATCA is “engendering a profound and growing anti-American sentiment abroad.”
Mr. Michel says a senior finance executive at the Hong Kong branch of a major investment house told him that FATCA was “America’s most imperialist act since it invaded the Philippine Islands in 1899.”
I don’t even want to think how that executive is personally and professionally affected by FATCA!
Plus, tax lawyers at the Swiss-American Chamber of Commerce in Zurich called FATCA “the neutron bomb of the global economic system” for what they argued would deter foreign investment in US securities.
But, is US listening? Silly question. Of course they aren’t.
Just as a point of interest, Scott Michel’s firm is Caplan, Drysdale. Some of you might remember that it was posted a while back on Brock that another partner in that firm (Mark Matthews) was working to assist in altering some of the ‘rules’ for ‘accidental americans’ being able to become compliant without having to go through the onerous disclosure programs offered by the IRS. I believe Mr. Matthews was instrumental in getting the latest change in rules. Not that they are any better!
Here is an article from Ernst and Young on A Second Option for FATCA Compliance involving Japan and Switzerland. It would be great to hear the opinions of folks in those countries on this.
It’s a bit difficult to comment on this now, since it is all up in the air and rather undefined. Who and why are recalcitrant holders? What are the plans for which Swiss pensions? What are the burdens to be reduced? What does it mean to simplify FATCA implementation? It is good that “Swiss financial institutions would not be required to terminate the accounts of recalcitrant holders”, because such, in my view, would fall under discrimination based on national origin, which is a federal crime in the US. What I know right now is that each bank is dealing with this differently for each individual and that the expected client fees won’t cover the anticipated costs.
Thanks for those comments Swisspinoy. I had the same questions you do. I was hoping maybe you had heard more about it in Switzerland.
Do you think this will make any difference to the Swiss banks that are already closing accounts and refusing to renew mortgages for US persons in Switzerland?
I highly doubt it. I’m getting the impression that not having US clients is a simple and less expensive means of being FATCA compliant. Many banks with US clients are likely going to charge their US clients a service fee which probably won’t even cover the total costs. People with investments in the US may have to bank under the same conditions as US clients, even if they don’t have US citizenship. Currently, I think that B-Permit Americans can only bank with Post Finance. C-Permit Americans can probably bank at Credit Suisse or UBS, while duals can bank with maybe 10 banks, while most banks appear to be rejecting US clients.
It seems Swiss Finance Minister does not think a Romney government would change much.
The law firm that wrote this article says “Our take is that repealing FATCA is political suicide for either party. How can either party justify repealing law which is designed to convert former tax dodgers into taxpayers?”
Most of us are not tax dodgers. We’re average people living average lives outside USA. That is what is so wrong about FATCA.
Not sure where to post this, but seeing that it’s about a Swiss banker, I will post it here.
First, IRS jailed Bradley Birkenfeld for helping Americans to hide money in Switzerland. Then, IRS gave him $104 million for turning folks in.
Pretty scary stuff. Great incentive for banks to turn in “tax cheats”. Of course, the problem with that is we aren’t tax cheats. We simply choose a bank–just like the President’s Press Secretary–which has an ATM five minutes from our homes.
I wonder if Birkenfeld will return to Switzerland with his $104 million or if he will remain in US. Perhaps he will replace Douglas Shulman. If Geithner can become Secretary of Treasury, surely Burkenfeld can become IRS Commissioner. Think what a great job he could do promoting FATCA.
Of course, with that $104 million, Burkenfeld will not have to work another day in his life. Maybe he’ll head to Cayman Islands instead.
For a government with so much debt, $104 million sounds like a lot of money for a situation that is probably unlikely to be repeated again.
“Actually, I suspect Victoria is being quite tactful and holding back from how she “really” feels.”
Well, yes. I’m a lady of a certain age who is trying to get into heaven now. 🙂
@Victoria: There is a place in heaven reserved for you–but not for a very long time! We need you here on earth.
@Everyone: Victoria has posted a must read,
A Manifesto from the Americans in Switzerland is on Victoria’s blog at http://thefranco-americanflophouse.blogspot.ca/2012/09/a-manifesto-from-americans-in.html
I especially love the quote at the beginning:
From Jean-Jacques’ Citation du Jour:
“Si vous avez l’impression d’être trop petit pour pouvoir changer quelque chose, essayez donc de dormir avec un moustique et vous verrez lequel des deux empêche l’autre de dormir.”
“In case you think you are too small to change anything, try sleeping with a mosquito, and figure out which one is depriving the other of sleep.”
(Tenzin Gyatso, shortened from Jetsun Jamphel Ngawang Lobsang Yeshe Tenzin Gyatso, born Lhamo Dondrub,14th Dalai Lama (1935-))
As Victoria suggests, we need to keep buzzing together to wake up the US. If that doesn’t work, she says it will be time to draw some blood and get them scratching.
@Blaze, thank you so much – for your words and for the link. I’m doing everything in my power to maintain my current residency status as living breathing member of the human race on planet Earth. 🙂
I’m glad you liked the quotation. This comes from a mailing list run by my dear friend, Jean-Jacques. Once a day he sends out a quotation in both English and French and it’s always good. The list is open to all so if you’d like to join it just see this post for JJ’s contact info.
Or send me an email via the Flophouse blog and I’ll forward it to him.
This does not seem to warrant a thread of it’s own, so I will post it here.
Dollars and Cents, described as “an investment and tax office” is offering a free seminar for people in the Amherstburg and LaSalle areas of Ontario (I think that is near Windsor).
I have no idea if they will deal with FATCA, the status of those who relinquished decades ago, etc. I have posted a comment with the article. Others might want to do the same.
If anyone is in the area, it would be great if you could check it out and report on it here.
Blaze, FYI I am now turning on the FATCA Fasten you Seat Belt light. Things are starting to heat up in the FATCA atmosphere and turbolence is expected ahead.
Our friends at the Canadian Bankers Association look like they are going to try to pull a fast one on the Canadian people. What is interesting though is at least RBC Investor Servics(which is a specific subdivision of RBC) is expecting and preparing for “Recalcitrant Account Holders”.
Tim, I add RBC to my permanent list of shame, and will tell everyone I know who’ll listen, about their proactive stance on FATCA. Thanks for that. Even if FATCA doesn’t get implemented, those on the permanent list of shame will never ever get any business from me or mine.
I have sent this to Canadian Civil Liberties Association. They still have not confirmed if they will become involved in this issue, but the more information like this that they receive, I hope the more likely it is they will they may become involved in FATCA before it is too late.
@Tim: And here is ScotiaBank’s CEO saying banks need to rebuild public trust if the economy is to flourish and grow. Violating our fundamental banking, privacy and equality laws is not exactly the way to do that.
I suspect you will like the comments posted on LinkedIn by a friend of mine.
From Linkedin(where all the big FATCA compliance types hang out)
Third I hear a lot about especially from financial institutions about “reputational risk” basically we don’t want to get called in front of Carl Levin’s Subcommittee on Investigations. Canadian FFI’s and Canadian politicians though need to start thinking about another kind of risk and that is “Goodbye Charlie Brown” risk after the time in the 1980s a senior citizens famously accosted then Prime Minister Brian Mulroney in the street over his plan to de-index seniors benefits with the words “You lied to us” and “Goodbye Charlie Brown” and forced the then government almost single handedly to back down on a key part of its economic platforms. A senior citizen accosting the current Finance Minister or Prime Minister of Canada over giving into to FATCA(which all of the Canadian FFI’s want them to do) will not be a “fun” experience notwithstanding the alternative experience of being hauled before Levin’s committee on investigations.
My friend who wrote this said he was thinking about you as Solange Denis the senior who famously went after Mulroney in the street over OAS/GIS benefits. I actually found a French language video of Denis and Mulroney going at back in the day.
More on the famous “Goodbye Charlie Brown” moment
@Tim: I’m delighted I got the attention of your friend. Wait until two senior citizens with MS (Ferfet and me) have our on-the- street Senior Moment with Flaherty and Harper over FATCA.
Actually, I think senior “US persons” are more upset about FATCA than younger ones–probably because we have a lot more to lose. Don’t mess with Granny or Grandpa!
In this meeting, and considering Canada is commemorating the war of 1812, would it make a better statement if you were in uniform?
Please let me know when this will take place. I will hop on the next flight just to ‘be a fly on the wall’. And I think, bubble is right, you really need to wear the uniform. Definitely more effective!
@bubblebustin’: I’ll put the uniform back on and pick up my sword again! If Toronto Warrior Rob Ford thought Princess Warrior Mary Walsh (This Hour Has Twenty Two Minutes) was scary, wait until Flaherty and Harper see Blaze in her Brock uniform.
I just have to decide which cane to use. I have 19–all to match my wardrobe. If I have to support myself, I want to do it in style.
I will probably take Poppy (all my canes have names) because she is red and white and the flower itself represents being willing to die for freedom. I will tattoo a maple leaf onto my face (temporary!)
I did local television commentaries on disability issues for 10 years called Raising Cane. My community quickly learned my canes and I don’t back down easily when we’re advocating for something we believe in. That was nothing compared to how much I will Raise Cane over FATCA!
I’d love to be there to witness that Blaze!
New article in the Financial Times:
US tax net closes on Americans living in Britain
Note: the tax lawyer quoted Suzanne Reismann has said things in the past such as renouncing your citizenship is “stupid.”