Monthly Archives: January 2014

Relinquishing: No Obligation For CLN

George has made another great find. This one is from US Congress on CLNs.

There is no obligation for an individual to obtain a CLN or otherwise notify the Department of State of relinquishing one’s citizenship.

Too bad Congress didn’t bother to tell US Treasury and IRS or banks and governments around the world about that hidden gem.
Calgary 411 cross-posted our thread on Dual Citizenship: “Paramount Allegiance-Predominant Claim at Brock (where I originally picked up the information from George). I am now cross-posting Calgary’s thread from Brock on this Joint Congressional Committee published report, 84-288-GPO-CPRT-JC-2-03-7-2, B. Aquisition and Loss of Citizenship
I suspect this will not help our friends in Switzerland,  France, Israel or elsewhere where banks are demanding CLNs or closing accounts.  Alone, it won’t win the battle for us in Canada. But, it’s one more weapon in our growing arsenal to fight this,
We are a diverse army, but together I think we are formidable. I think Flaherty, Shoom, Trudeau and the CBA know thatl–but they will never admit it to us.

“Where you are born should not dictate your potential as a human being.” (Romeo Dallaire, retired general, humanitarian, Canadian Senator)

Let’s make Romeo proud of our troops!

Another great find from George.  This one from US Congress on CLNs:

There is no obligation or requirement for an individual to obtain a CLN or otherwise notify the Department of State of relinquishing one’s citizenship.

Someone in US Department of State might want to inform US Treasury, IRS, banks and governments around the world of that hidden gem.
Calgary411 cross-posted our thread (which we picked up from George at Brock) over at Brock.  I am now cross-posting her Brock thread here. Joint Congressional Committee published report, 84-288-GPO-CPRT-JC-2-03-7-2, B. Aquisition and Loss of Citizenship 
Somehow I suspect this won’t help our friends in Switzerland, Britain, France, Israel and elsewhere. It may not even suffice on its own in Canada. But, it is definitely one more arsenal in our ever-growing Canadian military to fight FATCA.
It’s certainly one more thing to send to Flaherty,  Shoom, Trudeau, Canadian Bankers Association and others.

Dual Citizenship: "Paramount Allegiance-Predominant Claim"

Over at Brock, George posted some information from U.S. Department of State on dual citizenship which is very useful to us.  It says:

From the US Dept of State, 7 Fam 080, the formal and OFFICIAL US Position.

“b. It is a generally recognized rule, often regarded as a rule of international law, that when a person who is a dual national is residing in either of the countries
of nationality, the person owes paramount allegiance to that country, and that country has the right to assert its claim without interference from the other country.”
“e. U.S. Policy on Dual Nationality: When a U.S. citizen is in the other country of their dual nationality, that country has a predominant claim on the person.

So, there we have it. Even the United States says we owe our “paramount allegiance” to our country of residence. That is exactly how most of us are living our lives.
Our countries of residence have “the right to assert its claim without interference from the other country.”
So, why aren’t Canada, France, Switzerland, New Zealand, China,  Russia, Brazil and India telling the U.S. to just FATCA off?  Our “paramount allegiance” is to those countries and those countries have a “predominant claim” to us.

Access to Basic Banking Services in Canada and FATCA

February 6, 2014 Update: Yesterday Canada’s Finance Minister announced Canada has signed a FATCA Intergovernmental Agreement with the United States. That may or may not change some of the information provided here. We will update as we learn more about what this may mean.
February 10, 2014 Update: Canada Revenue Agency has released some information on FATCA.  Again, we don’t know exactly what this will mean, but this information could be  important:

Will my financial institution be asking me if I was born in the U.S.?
A financial institution complying with the agreement will not be required to ask its account holders about their place of birth.If a financial institution, applying the due diligence rules of the agreement to its accounts, discovers any records connected to the account that have an unambiguous indication of a U.S. place of birth, the financial institution may treat the account as a reportable account or follow up with the account holder to obtain documentation that shows the account holder is not a U.S. resident or U.S. citizen.
Does the agreement require Canadian financial institutions to report to the CRA on any individuals who were told that they relinquished their U.S. citizenship when they became Canadian citizens?
The agreement does not require Canadian financial institutions to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.

Most of our banks won’t have an “unambiguous U.S. place of birth in their records because they were not able to ask that question when we opened accounts with them.
Can a bank refuse to open an account for me because I was born in the United States? Can a Canadian bank close my long-standing account because I won’t tell them where I was born or I won’t give consent for my very personal banking information to be sent to IRS? Piggy Bank
Do I have to keep my life savings in a piggy bank to keep it safe from the United States?
Those are common questions we all have had since FATCA attacked our responsible, honest lives. Many of us have been customers at the same bank for years or decades. In some cases, staff who have known us all that time are aware of our U.S. connection. In other cases, they are not aware of it.
I am not a lawyer or banker and this information is not intended as legal or professional advice. It is simply some of the pieces of the puzzle which I have learned over the past two year.
The first thing to do is take a deep breath. Let it out slowly. Calm yourself.
In Canada, we have had no reports of a Canadian bank closing or refusing to open an account for anyone because of birthplace. That puts us far ahead of our friends in many other countries around the world.
The next thing to do is to know your rights under Canadian banking, privacy and human rights laws. This post will focus on Access to Basic Banking Services.
These regulations are complex. However, their meaning is communicated in easy-to-understand language from the Canadian Bankers Association. Yes, that’s the same organization that is insisting it must comply with FATCA.
But, check it out. To open an account, you must present two pieces of identification. These can include:

Canadian birth certificate, a Canadian driver’s license, your Canadian Social Insurance Number, Canadian citizenship certificate, Canadian permanent resident card, Canadian passport, Canadian old age security card, etc.

Did you notice only a Canadian birth certificate can be used to open an account in Canada? A foreign birth certificate cannot be used!  That is hugely significant–and makes Canada different from many countries around the world which require a birth certificate for opening an account.
Except for a Canadian passport, there is nothing on that list that reveals your place of birth. So, the solution is clear. Don’t use a Canadian passport with a US place of birth  opening an account. Use the other pieces of ID.
Children born in Canada to parents born in United States will, of course, have a Canadian birth certificate, so there should be no way for the bank to know if they may be considered to be “US persons.” For them, presenting that Canadian birth certificate may be their best protection.
The bank does have the right to know your date of birth. This is very different from knowing your place of birth. A driver’s license, citizenship certificate, permanent resident card and Old Age Security card all contain this information–but not place of birth. You are also required to provide your address and occupation–unless you are homeless or unemployed.
So, again, you are under no obligation to tell your bank where you were born to open an account. If they ask, just stick to the information they are entitled to know.
According to CBA, a bank can refuse to open an account if:

You plan to use it for illegal or fraudulent purposes; You have a history of fraudulent activity in financial services within the past seven years; You knowingly made false statements to open the account; You would subject other customers or employees to physical harm, harassment or abuse; You refuse to consent to verification of identification used to open the account.

Again, I don’t see anything there that says they can refuse an account if you refuse to tell them where you were born.
The bank is required to obtain your SIN for accounts that provide income so that income can be reported to CRA. You are not required to provide SIN for non-income accounts.
So, can a bank close an account if you refuse to tell them if you might be considered to be a “US person” or refuse to give consent for information to be transmitted to IRS?
Access to Basic Banking Services does not specifically address the issue of closing accounts. However, in a letter to US Treasury and IRS, TD Vice-President said (page 3):

If an FFI closed an account because such information was not provided,  the purpose of ABBS would be frustrated, and in addition, the FFI would subject to fines. Each violation of the ABBS requirements would subject the financial institution to a penalty of up to $200,000.
Even if an FFI could close an account of an uncooperative account holder, an FFI could not refuse to reopen an account for such individual if adequate identification under ABBS were again provided.

Despite all of that, Canadian Bankers Association FATCA Information for Clients says:

The majority of Canadians are not U.S. persons and, in most cases, FATCA will have little impact. If you have an existing account and there is an indication that you may be a U.S. person, or if you are opening a new account, your financial institution may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person.
If you choose not to provide this additional documentation upon request, at a minimum, your financial institution may be required to withhold a tax of 30% on U.S. source paymentsthat you receive and send this money to the IRS. Also, your financial institution may refuse to open an account or may be required to close existing accounts.

CBA is sending mixed messages on its own website. It’s important we stand up to the banks and ensure that the rights CBA outlines in Access to Basic Banking Services are not compromised by their statement on FATCA. It’s also important we remain vigilant to ensure the government does not change those laws.
It’s also important to note this information applies to basic banking services only. Investment accounts are treated differently and some people have already been asked by investment arms of banks or by investment firms the “US person” question. I do not know the legalities of this or if anyone has challenged it.
In addition, credit unions fall under provincial jurisdiction, so they are regulated by the provinces and territories.
NOTE: The author is not a lawyer. Information on this page is not legal advice and should not be relied upon as such. If you believe you might have issues with US or any other legal authorities you should contact an attorney

February 8–Information Session London Ontario

Solving the Problem of U.S. Citizenship Uncle Sam More(UPDATED)
Uncle Sam wants up to 1 million Canadians. Actually, he doesn’t want them. He just wants their money and information about their legal Canadian bank, credit union and other accounts.
U.S. Treasury and Internal Revenue Service (IRS) insist they have they right to know all about the banking and other financial accounts of these Canadians simply because they were born in the United States, worked in the U.S. under a Green Card or have some other bizarre connection to United States. This includes joint accounts held with Canadian-born spouses, family or business partners.
Most are Canadian citizens—some for their entire lives or decades.
Canadian banks are spending up to $100 million each to comply with Foreign Account Tax Compliance Act (FATCA) to provide information to IRS on “US persons” among their customers—even though this violates Canadian banking, privacy and human rights laws.
Finance Minister Jim Flaherty has called FATCA “extraterratorial” and “unwarranted.” Yet, the Canadian government is negotiating an Intergovernmental Agreement with the United States in secret while keeping Canadians in the dark about whether their rights under Canada’s Charter of Rights and Freedoms will be sacrificed for a foreign government’s demands. An agreement has now been signed!
Many Canadians have lived this nightmare for over two years. Others are just becoming aware due to recent media coverage.
An information session “Solving the Problem of US Citizenship” will be held in the Room Change: Martha Bishop Room at Landon Branch Library, 167 Wortley Road, Saturday February 8, starting at 1:00 p.m. featuring Toronto lawyer John Richardson. Space is limited. $20 to cover costs.
Before you panic or rush to a U.S. tax accountant or lawyer, come and learn about your rights and options. Check out information in advance at
If you’re in the London area, we hope to see you there!  If you’re planning to attend, please e-mail me at maplesandbox dot ca

Finally! A "Response" But "Few Answers" to Ted Hsu Questions

Finally, the government “responds to Ted Hsu’s questions.
But, Dr. Hsu says:

You can see the response to my Order Paper Question on FATCA. It is a long response (226 pages in both official languages), but it’s surprising how few answers there are to a 55 part question! For instance, on page 75 I asked the Minister of Finance to provide a list of specific individuals and groups he had consulted with regarding FATCA and the response was simply that “The Government of Canada has consulted and has been contacted by individuals and groups to discuss the implications of FATCA and an IGA in Canada.” I also asked which studies and analyses the Department of Finance had undertaken with respect to FATCA, and was told that “The Department of Finance is reviewing the implications of FATCA on an ongoing basis. FATCA has raised a number of concerns in Canada- among both dual Canada-U.S. citizens and Canadian financial institutions.”

As Dr. Hsu also says:

We all deserve better answers from the government.

He’s asking for our help:

I know there is a lot of expertise out there to help analyse and pick through this response. So I invite you to do so on my facebook, and please let me know what you find.
Thank you!

I haven’t had time to review the “response” yet because I wanted to quickly get this posted. After we have had time to read this, I hope we will all pitch in and share a “lot of expertise ” to analsye this for Dr. Hsu.
Yikes! Lots to do. Help Dr. Hsu, do submission to help friends in New Zealand, write articles, organize information session. Have a life?
I understand from one of Dr. Hsu’s staff that “responses” to Scott Brison’s questions are expected later this week. I think we should be prepared for more weaseling.

Flaherty Should Tell U.S. To Back Off On FATCA: Victoria Times Columnist

The media coverage keeps coming. First CBC and CTV. Yesterday, Global News. Today Victoria Times Columnist says FATCA Invades Canada.
They begin by writing:

Prime Minister Stephen Harper should pay a little less attention to protecting us from incursions on our Arctic territories and focus more on preventing an invasion from the south.
It’s not a military assault, but an invasion of privacy in the form of the U.S. Foreign Account Tax Compliance Act, which requires that foreign banks report to the Internal Revenue Service in the U.S. information about accounts held by “U.S. persons.”

They say it’s not clear how FATCA will happen, but that it should concern everybody because FATCA “spreads a wide net and infringes on personal privacy and national sovereignty.”
They conclude with some strong advice to Canada’s Finance Minister:

Flaherty should tell the U.S. to back off, that Canadians and legal residents of Canada should be subject to laws made in Canada, not in Washington.

Does anyone else have the sense whoever wrote this (no byline with the editorial) has checked out Sandbox and Brock?

US Senate Finance Committee Submission–Richardson, Yates and Kish

Here’s an excellent submission (Request for Tax Rule Changes) to the U.S. Senate Finance Committee.
This was written by Toronto lawyer John Richardson, University of Toronto professor Dr. Stephen Kish and (this is huge!) U.S. attorney Willard Yates.  Mr. Yates’ involvement is significant because he retired from Office of Associate Chief Counsel (International) (ACCI), Internal Revenue Service after 31 years of service.
The 32 page comprehensive submission deals with everything from problems of citizenship based taxation to the financial and psychological costs of renouncing US citizenship. Despite the complexity of issues covered, it is quite easy to understand for most of us who have been around this issue for a while (although newbies may very well find it overwhelming and frightening).
The report is also posted at, John Richardson’s Canadian website designed to counsel US citizens abroad who find themselves having to live in a FATCA and FBAR world.

Global News: We're Not Wealthy Tax Expats!!!

Canadian data doesn’t support stereotype of wealthy U.S. expat says Global News.
In an article about FATCA, Patric Cain uses Canadian census data to bust the myth that we are all a bunch of rich folks hanging out under palm trees sipping champagne on the beach near our yacht. (When I look out the window, all I see is snow, but I digress!)
Rather, he found the highest correlation near the US border. In Ontario, that means, St. Catharines, Niagara Falls, Sarnia, Windsor and Kenora.  Hmm. I wonder how many yachts make their way across the Detroit River.

“None are areas with median family incomes noticeably above the national average.”

However, the greatest concentration of U.S. citizens is in western New Brunswick along the border with Maine,

Where median family incomes are well below the national average.

Mr. Cain quoted from Victoria’s post last week at Franco-American Flophouse.  This is the second time her post has been picked up by the media. The other was by French News Online. Congratuations Victoria!
Mr. Cain also points out:

In Canada, it seems unavoidable that a decision about FATCA will lead to a serious debate about national sovereignty – which the NDP seems to be positioning itself for.
In the United States, the Republican National Committee’s vote to oppose FATCA has given the issue a sharply partisan form.
(I’m intrigued to see the NDP and the Republican National Committee on the same side of any issue, but there you are.)

I certainly understand his intrigue on that point. Likewise, I find myself stunned that I personally am lining up with Republicans on any issue.

Watch out for smaller investment firms

While the emphasis here and at Brock has been primarily on the larger financial firms and their industry association, it will be interesting to watch how the smaller investment firms react to FATCA.
Here’s one item from that may illustrate what we may see:
Advisors must be more diligent in determining whether clients truly are U.S. resident taxpayers, and remind them of their obligations. For our part, we won’t open accounts until prospects provide copies of their passports and sign IRS Form W-9 (Request for Taxpayer Identification Number and Certification
In particular, the smaller firms, which number in the hundreds, if not thousands, may not get the FATCA due diligence requirements correct and ask for information that is not required and may very well be illegal.