Tuesday, November 19, 2013

Never Heard Of FATCA? You Should

Until recently, I had never heard of FATCA, in fact it was a program on CBC that brought it to my attention.

FATCA is seriously troubling for Canadians.  In theory, it should only affect people who have American citizenship.  But, the law itself has enormous implications for countries outside of the United States.

FATCA is so intrusive it often needs to be somehow incorporated into foreign countries’ legislation in order for the banks to be able to comply with it without breaking domestic laws (such as the ones that govern the release of confidential information). It isn’t clear yet how Canada plans to do this. 
The “how” here matters, because it might determine whether Parliament gets a say in all this or not. Ottawa might, for example, decide to re-interpret the existing U.S.-Canada tax treaty to allow financial institutions to abide by FATCA provisions. This would shut out lawmakers. 
Another way to by-pass the Hill could be to draft a document that looks like an intergovernmental agreement and then call it by another name–say, “memorandum of understanding,” which does not require parliamentary action.  
Wondering why we haven't heard anything about this?  Yeah, so am I.  The Harper Government seems loathe to discuss anything publicly, and just as the TPP negotiations are so deeply secret that we learn more from foreign sources about them than from our own government.  This appears to be another one of those situations.

I have several problems with FATCA from a philosophical perspective.  First is the extra-territorial nature of the legislation itself.  I object on a fundamental level with governments writing legislation which ultimately places the obligations for that legislation's implementation on foreign powers.  US law is not a universal law, and it should not be imposed upon other nations.

The second aspect of this law is that it essentially obliges Canadian banks and the CRA to act as agents for the IRS.  Not only do Canadians end up paying the direct costs of this attempt to ensnare American expats who aren't meeting their US tax obligations.  I have a huge problem with this - if the US wants to catch tax evaders, then they should bear the costs of doing so.  Taxpayers in foreign jurisdictions should not be generally responsible for implementing laws written in the US, much less the costs of implementing those laws.

One aspect of this law which is particularly offensive is the fact that the US law imposes penalties on foreign companies doing business in the United States who fail to comply with the terms of this law.  From a tactical perspective, I can appreciate the carrot-and-stick nature of this feature of FATCA, but that doesn't make it right.  However, it creates an environment where banks may well choose to violate Canadian laws to avoid the penalties.

Lastly, there is a fundamental point about FATCA - the US government has absolutely no right whatsoever to Canadian personal data - much less our banking data.  This is a criminal abuse of power and an unreasonable invasion of privacy. 

7 comments:

Anonymous said...

Another issue with this legislation is that it not only affects US citizens, it affects US 'persons' - and that would include such people as spouses of US citizens, children of US citizens, Canadian citizens who spend time in the US, etc. etc. ALL of these people will fall under the FATCA requirements that would open up their banking information to the IRS in the USA.
I hope for Canada's sake that they stand up to this horrendous legislation and tell the US to pack up and go away.

Blaze said...

Thank you for recognizing FATCA does not just affect Canadians who were born in United States.

It affects all Canadians. FATCA violates Canadian banking, privacy and human rights laws and our Charter of Rights and Freedoms.

Most importantly, FATCA threatens Canada's sovereignty.

Like you, most Canadians are totally unaware of FATCA because the Canadian media are generally quiet about it.

Even Council of Canadians and rabble.ca show no interest in the implications of FATCA.

To learn more about FATCA and what Canadians are doing about it, check out maplesandbox.ca or isaacbrocksociety.ca

MgS said...

I think even more troubling is the dead silence of the Harper Government on the matter.

Except for one public comment by Flaherty a few years ago, there's been nothing.

That likely means they are going to roll over and acquiesce to the demands of the US, regardless of its impact on Canadians.

Outraged Canadian said...

It is so great that this outrageous move by the US is finally being seen, recognized and discussed. As Blaze said, the Canadian media has, for the most part, simply ignored FATCA and the implications - unless they decided to regurgitate sound bites from the IRS calling us tax evaders, and tax cheats.
We are honest, hard-working Canadians, who should not have to fear that our personal information is being sent to a foreign government.

Our government MUST protect our rights - and protect our banks from the ridiculous penalties for non-compliance that the US will try to enforce. Flaherty, Harper, Say NO to FATCA!

T Dott said...

Note also the Constitutional expert Peter Hogg believes that FATCA would violate the Constitution.

See:

http://www.greenparty.ca/media-release/2013-03-13/implementation-fatca-likely-unconstitutional-says-leading-constitutional-ex

http://www.greenparty.ca/sites/greenparty.ca/files/attachments/peter_hogg_fatca.pdf

[The Greens were *way* ahead of the other parties in identifying FATCA as a troubling issue]

T Dott said...

Note also the Constitutional expert Peter Hogg believes that FATCA would violate the Constitution.

See:

http://www.greenparty.ca/media-release/2013-03-13/implementation-fatca-likely-unconstitutional-says-leading-constitutional-ex

http://www.greenparty.ca/sites/greenparty.ca/files/attachments/peter_hogg_fatca.pdf

[The Greens were *way* ahead of the other parties in identifying FATCA as a troubling issue]

Anonymous said...

Hoping and praying Canadian legislators get the first set of balls and put the brakes on this, I cannot find enough fricking expletives, FATCA legislation.
Canada can retaliate by withholding 30% of source money regarding US banks.
To think there are career American government employees on the US trough who are likely so proud of what they are doing to the detriment of other governments and innocent expats.
Hey, when others are paying for what is to be gained. who cares how much is being spent and footing the bill? as long as it is not the US, no problem. This attitude is a disgrace and should be bit_ch slapped right back to Washington.
Looking forward to see the Canadian governments
courage to stand up to this ethically wrong US legislation and cause the first pothole on this ridiculous road.