FATCA agreement between Canada and the United States
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The FATCA agreement is an international agreement signed between
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
that allows the implementation of the
Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indication ...
(an Act of the U.S. Congress) in Canada. It is one of 30 intergovernmental agreements the US has concluded with other countries to implement the FATCA. FATCA requires
United States person The term United States person or US person is used in various contexts in law of the United States, US laws and regulations with different meanings. It can refer to Natural person, natural persons or Legal person, other entities. Data collection a ...
s, including individuals who live outside the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
, and financial institutions outside the United States, to report the principal amount held in their financial accounts outside of the United States to the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
(IRS). According to the
Canadian Broadcasting Corporation The Canadian Broadcasting Corporation (french: Société Radio-Canada), branded as CBC/Radio-Canada, is a Canadian public broadcaster for both radio and television. It is a federal Crown corporation that receives funding from the government. ...
(CBC) there are about one million American citizens living in Canada. This treaty also affects their spouses, children, or anyone with whom they own property, share a business connection, or hold a joint financial account. The agreement exempts
Tax-Free Savings Account A tax-free savings account (TFSA, french: links=no, Compte d'épargne libre d'impôt, CELI) is an account available in Canada that provides tax benefits for saving. Investment income, including capital gains and dividends, earned in a TFSA is n ...
s,
Registered Disability Savings Plan A Registered Disability Savings Plan (RDSP; french: Régime enregistré d'épargne invalidité) is a Government of Canada program designed to enable individuals with disabilities, with assistance from family and friends to save for their future fina ...
s and
Registered Education Savings Plan A registered education savings plan (RESP) in Canada is an investment vehicle available to caregivers to save for their children's post-secondary education. The principal advantages of RESPs are the access they provide to the Canada Education Savi ...
s. Canadian banks say they expect compliance costs to be "enormous". According to
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,
Revenue Canada The Canada Revenue Agency (CRA; ; ) is the revenue service of the Canadian federal government, and most provincial and territorial governments. The CRA collects taxes, administers tax law and policy, and delivers benefit programs and tax credit ...
minister
Kerry-Lynne Findlay Kerry-Lynne D. Findlay (born 12 January 1955) is a Canadian politician, who was elected as the MP for South Surrey—White Rock in the 2019 federal election. She previously sat in the House of Commons of Canada from the 2011 Canadian federal el ...
promised that this treaty will not impose any U.S. taxes or
penalties Penalty or The Penalty may refer to: Sports * Penalty (golf) * Penalty (gridiron football) * Penalty (ice hockey) * Penalty (rugby) * Penalty (rugby union) * Penalty kick (association football) * Penalty shoot-out (association football) * Penalty ...
on people holding accounts in Canada.


October 2013 Financial Post report

While anticipating the agreement but before it was signed, Scotia Bank, one of Canada's large banks, spent almost $100 million, implementing a system to report to the United States the account holdings of Canadians of American origin, and their Canadian born spouses in order to comply with
FATCA The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indication ...
. According to the
Financial Post The ''Financial Post'' was an English Canadian business newspaper, which published from 1907 to 1998. In 1998, the publication was folded into the new ''National Post'',"Black says Post to merge with new paper". ''The Globe and Mail'', July 23, ...
FATCA requires Canadian banks to provide information to the United States including total assets, account balances, account numbers, transactions and more, and includes assets held jointly with Canadian-born spouses and other family members.


CTV January 2014 report

In January 2014
CTV Television Network The CTV Television Network, commonly known as CTV, is a Canadian English-language terrestrial television network. Launched in 1961 and acquired by BCE Inc. in 2000, CTV is Canada's largest privately owned television network and is now a divis ...
reported that Allison Christians, the H. Howard Stikeman Chair in Tax Law at
McGill University McGill University (french: link=no, Université McGill) is an English-language public research university located in Montreal, Quebec, Canada. Founded in 1821 by royal charter granted by King George IV,Frost, Stanley Brice. ''McGill Universit ...
, said that the Foreign Account Tax Compliance Act could impact all Canadians. "The way the U.S. law is written, financial institutions around the world have an obligation to ensure that any accounts that are held by American people with U.S. status, that information about that account is given to IRS...." Allison Christians collaborated with Queens University professor Arthur Cockfield on another paper on this topic. FATCA requires Canadian banks to identify and supply the financial information of anyone considered to be a
U.S. person The term United States person or US person is used in various contexts in US laws and regulations with different meanings. It can refer to natural persons or other entities. Data collection and intelligence The term "US person" is used in the c ...
to the IRS. FATCA may affect Canadians with no ties to the U.S. Christians says that financial institutions face high costs to implement the new rules, and that all customers will face higher banking costs typically passed on to clients in the form of higher fees and charges.


''Financial Post'' March 2014 report

On March 26, 2014 Julius Melnitzer wrote in the ''
Financial Post The ''Financial Post'' was an English Canadian business newspaper, which published from 1907 to 1998. In 1998, the publication was folded into the new ''National Post'',"Black says Post to merge with new paper". ''The Globe and Mail'', July 23, ...
'' that FATCA requires foreign financial institutions to report the financial activities of their American clients to the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
and to withhold funds in appropriate circumstances. However the Isaac Brock Society leaked documents from CRA's guidance notes that suggest that the
Canadian federal government The government of Canada (french: gouvernement du Canada) is the body responsible for the federal administration of Canada. A constitutional monarchy, the Crown is the corporation sole, assuming distinct roles: the executive, as the ''Crown ...
and
Canada Revenue Agency The Canada Revenue Agency (CRA; ; ) is the revenue service of the Canadian federal government, and most provincial and territorial governments. The CRA collects taxes, administers tax law and policy, and delivers benefit programs and tax credit ...
(CRA) have undermined the intergovernmental agreement (IGA) with the U.S. which is aimed at catching American tax evaders living in Canada. It is alleged that
Finance Canada The Department of Finance Canada (french: Ministère des Finances Canada) is a central agency of the Government of Canada. The department assists the minister of finance in developing the government's fiscal framework and advises the government on ...
and CRA "intended to drastically depart" from key definitions found in the IGA and FATCA, and that CRA's interpretation of the draft legislation is "significantly different" from
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
guidance. For instance, CRA's guidance suggests that a place of birth is only unambiguous if an account holder lists it as "New York, New York, USA" but not if it is listed as "New York, New York."


Litigation

Two
American-Canadian American Canadians are Canadians of American descent. The term is most often used to refer to Canadians who migrated from or have ancestry from the United States. Demography According to the 2016 Census, 29,590 Canadians reported American as ...
dual citizens living in Canada, Virginia Hillis and Gwendolyn Louise Deegan, sued the Canadian government (specifically the
Attorney General of Canada The asterisk ( ), from Late Latin , from Ancient Greek , ''asteriskos'', "little star", is a typographical symbol. It is so called because it resembles a conventional image of a heraldic star. Computer scientists and mathematicians often voc ...
and the
Minister of National Revenue The minister of national revenue (french: ministre du revenu national) is the minister of the Crown in the Canadian Cabinet who is responsible for the Canada Revenue Agency (CRA), as well as the administration of taxation law and collection. T ...
) in 2014 in the
Federal Court of Canada The Federal Court of Canada, which succeeded the Exchequer Court of Canada in 1971, was a national court of Canada that had limited jurisdiction to hear certain types of disputes arising under the federal government's legislative jurisdiction. ...
, claiming (among other things) that the intergovernmental U.S.-Canadian agreement that implements FATCA violates the
Canadian Charter of Rights and Freedoms The ''Canadian Charter of Rights and Freedoms'' (french: Charte canadienne des droits et libertés), often simply referred to as the ''Charter'' in Canada, is a bill of rights entrenched in the Constitution of Canada, forming the first part o ...
, particularly the provisions related to discrimination on the basis of citizenship or national origin. The suit was prepared by a group called the Alliance for the Defence of Canadian Sovereignty (ADCS). In 2015, the Federal Court of Canada dismissed the suit, upholding the intergovernmental agreement. The Federal Court also rejected the claims in 2019, although a further appeal to the
Federal Court of Appeal The Federal Court of Appeal (french: Cour d'appel fédérale) is a Canadian appellate court that hears cases concerning federal matters. History Section 101 of the Constitution Act, 1867 empowers the Parliament of Canada to establish "addit ...
may follow.


See also

*
American Australian American Australians are Australian citizens who are of American descent, including immigrants and residents who are descended from migrants from the United States of America and its territories. This includes people of European, African Amer ...
s * American Brazilians *
American Canadian American Canadians are Canadians of American descent. The term is most often used to refer to Canadians who migrated from or have ancestry from the United States. Demography According to the 2016 Census, 29,590 Canadians reported American as ...
s *
American Citizens Abroad American Citizens Abroad (ACA) is a 501(c)(4) organization, organized as a Delaware corporation. Its sister organizationAmerican Citizens Abroad Global Foundation (ACAGF) is a 501(c)(3) organization. Together, referred to as ACA, it is a leading rep ...
** Americans in Cuba **
Americans in North Korea Americans in North Korea consist mainly of defectors and prisoners of war during and after the Korean War, as well as their locally born descendants. Additionally, there are occasional tours and group travel which consists of Americans via train ...
**
Americans in the Philippines American settlement in the Philippines ( fil, paninirahan sa Pilipinas ng mga Amerikano) began during the History of the Philippines (1521–1898), Spanish colonial period. The History of the Philippines (1898–1946), period of American colonializ ...
**
Americans in the United Kingdom Americans in the United Kingdom or American Britons, includes emigrants from the United States who gain British citizenship, people from the United States who are or have become residents or citizens of the United Kingdom. Population The 2001 ...
*
American diaspora Emigration from the United States is the process where citizens from the United States move to live in other countries, creating an American diaspora (overseas Americans). The process is the reverse of the immigration to the United States. The Un ...
* American Mexicans *
Australian American Australian Americans are Americans who have Australian ancestry. History The history of the Australian American population almost follows the story of both British Americans and Irish Americans, as Australia was a British overseas territory, Brit ...
s *
Common Reporting Standard The Common Reporting Standard (CRS) is an information standard for the Automatic Exchange Of Information (AEOI) regarding financial accounts on a global level, between tax authorities, which the Organisation for Economic Co-operation and Develo ...
*
Emigration from the United States Emigration from the United States is the process where citizens from the United States move to live in other countries, creating an American diaspora (overseas Americans). The process is the reverse of the immigration to the United States. The Un ...
*
European Union withholding tax The European Union withholding tax is the common name for a withholding tax which is deducted from interest earned by European Union residents on their investments made in another member state, by the state in which the investment is held. The Eu ...
*
Extraterritorial jurisdiction Extraterritorial jurisdiction (ETJ) is the legal ability of a government to exercise authority beyond its normal boundaries. Any authority can claim ETJ over any external territory they wish. However, for the claim to be effective in the externa ...
*
Immigration to the United States Immigration has been a major source of population growth and Culture of the United States, cultural change throughout much of the history of the United States. In absolute numbers, the United States has a larger immigrant population than a ...
*
International taxation of Americans International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries, or the international aspects of an individual country's tax laws as the case may be. Governments usually limit the ...
*
Relinquishment of United States nationality Relinquishment of United States nationality is the process under federal law by which a U.S. citizen or national voluntarily and intentionally gives up that status and becomes an alien with respect to the United States. Relinquishment is distinc ...
*
Taxation of non resident Americans An Accidental American is someone whom US law deems to be an American citizenship, American citizen, but who has only a tenuous connection with that country. For example, American nationality law provides (with limited exceptions) that anyone bor ...
* Taxation of United States persons * U.S. Legislation


References

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External links


Text of the Agreement
Canada–United States trade relations 2014 in Canada 2014 in the United States Treaties concluded in 2014 Treaties entered into force in 2014 Canada–United States treaties Tax treaties 2014 in American law 2014 in Canadian law
Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indication ...