Not ALL Canadians shall have the same rights. We serve only the banks
Thank you for your correspondence of February 12, 2014, about the Foreign Account Tax Compliance Act (FATCA) enacted in the United States.
I understand from your email that you are opposed to FATCA and are critical of actions taken by the Government of Canada.
As you are aware, the U.S. uses citizenship as the basis for taxation while Canada and most of the rest of the world use a residency-based approach. I understand that this situation creates unique challenges, including compliance burdens for U.S. citizens who reside in Canada or elsewhere in the world, even when they do not owe U.S. tax. Please note that the U.S. citizenship-based tax system has been in place for many years and is not altered by the recently signed intergovernmental agreement under the Canada–U.S. tax treaty.
The Canada Revenue Agency (CRA) administers taxes and benefits only in Canada. Therefore, it encourages U.S. taxpayers looking for information on their U.S. tax obligations to visit the U.S. Internal Revenue Service (IRS) website atwww.irs.gov and read its guidance on the streamlined filing procedures for non-resident U.S. taxpayers atwww.irs.gov/uac/Instructions-for-New-Streamlined-Filing-Compliance-Procedures-for-Non-Resident-Non-Filer-US-Taxpayers .
While FATCA was enacted by the U.S. government to promote U.S. tax compliance, it has raised concerns in Canada among dual Canada-U.S. citizens and Canadian financial institutions. If the Canadian government had not signed the intergovernmental agreement, non-compliance with FATCA could have subjected Canadian financial institutions and their account holders to sanctions, including special U.S. withholding taxes on payments to them from the U.S. Also, compliance with FATCA would have forced Canadian financial institutions to report information directly to the IRS, potentially violating Canadian privacy laws.
You can find more information on why the intergovernmental agreement was signed on the Department of Finance Canada website at www.fin.gc.ca/treaties-conventions/notices/fatca-eng.asp .
As Minister of National Revenue, I can assure you that the CRA will administer fairly any legislation enacted to implement the intergovernmental agreement according to the privacy and confidentiality rights of Canadians. The intergovernmental agreement is strictly an information-sharing agreement and the CRA does not collect the U.S. tax debt of a Canadian citizen if the individual was a Canadian citizen at the time the debt arose.
Canadians who hold financial accounts can find more information at www.cra.gc.ca/tx/nnrsdnts/nhncdrprtng/menu-eng.html .
I trust the information I have provided clarifies the position of the CRA on this matter.
Kerry-Lynne D. Findlay, P.C., Q.C., M.P.
Minister of National Revenue