Blaze Canadian
1867 Maple Way
Maple Sandbox, Canada
SND BOX
November 14, 2012
Mr. Keith Shoom
Business Income Tax Division
Department of Finance
17th Floor, East Tower
140 O'Connor Street
Ottawa, Canada
K1A 0G5
Dear Mr. Shoom:
RE: FATCA and Canadian Citizens/Residents
You have requested input regarding the attempts of the United States to invade the
financial lives and rights of Canadian citizens and residents who were born in U.S. or
who have a parent who was born in U.S.
I hope Canadian government will ensure all Canadian citizens and residents have equal
rights under Canada’s Charter of Rights and Freedoms and banking, privacy and human
rights laws.
CITIZENSHIP:
Canadian citizenship certificates (including mine) states the person “is a Canadian citizen
and, as such, is entitled to all the rights and privileges and bears all of the responsibilities,
obligations and duties of a Canadian citizen.”
When I took my oath of citizenship in 1973, I did so with pride. For four decades, I have
been an involved, responsible and connected Canadian citizen. In 1973, US Consulate
told me I was “permanently and irrevocably” relinquishing my US citizenship by
becoming a Canadian citizen. In fact, my citizenship oath contained a statement
renouncing my US citizenship. I had no hesitation to do so, as I was fully committed to
Canada. I have always believed Canada is fully committed to me as a Canadian citizen.
For 40 years, I have been--just like Prime Minister Harper--a Canadian citizen and only a
Canadian citizen.
So, it was a total shock to discover last year that United States wants to reclaim me and
my money. IRS did not care about me in 1973. I was young. I didn’t have any money.
Now that I am 61, semi-retired due to multiple sclerosis and with retirement savings
(which were encouraged by my Canadian government), IRS wants to reclaim me.
As you know IRS is demanding my bank and the banks of anyone else US deems to be a
“US person” provide information to a foreign government about our personal financial
affairs.
They further demand my bank, where I have been a loyal customer for 32 years, and my
credit union, where I have been a customer for 14, close my accounts if I refuse to
provide information about my place of birth or consent to release this information to IRS/
Like all other Canadians with some long-ago connection to US, I am outraged Canada
has not clearly and firmly reassured Canadian citizens of US origin that we have “all the
rights and privileges” of a Canadian citizen.
Instead, we are being treated like second class Canadian citizens. No other Canadian
citizen or even permanent resident born outside Canada is being threatened by a foreign
government in this way.
I fully expect Canadian government to ensure I do, in fact, have “all the rights and
privileges” of any other Canadian citizen. I will not accept discrimination against me by
my bank, credit union or government based on my national origin 61 years ago.
LAWS:
Access to Basic Banking Services:
As you are well aware, Access to Basic Banking Services does not permit a financial
institution to demand information about place of birth for anyone in Canada. It requires a
bank to open an account with appropriate identification. None of that identification
includes a foreign birth certificate.
Canadian Bankers Association has stated that is accurate, but they have insisted there is
nothing preventing a bank from closing an account. Yet, TD says doing so would
frustrate the intent of ABBS. Of course, if a Canadian bank closed an account of a
Canadian, ABBS would require them to reopen the account with appropriate ID.
Human Rights:
There is, of course, something preventing banks or credit unions from asking about place
of birth. That is the right to be free from discrimination based on national origin under
Human Rights Code of Canada. Ontario’s Human Rights Code also prohibits credit
unions from discrimination based on national origin or citizenship.
Privacy Laws:
Privacy Laws prohibit a bank from releasing information without a customer’s consent. I
can assure you my bank will not receive my consent to release information to a foreign
government.
Charter of Rights and Freedoms:
Canada’s Charter of Rights and Freedoms also prohibits discrimination based on national
origin. Courts have interpreted this to include citizenship. So, if the government changes
any of the above laws to accommodate a foreign government, it is in violation of the
Charter.
COURT CASES:
There have been earlier court decisions when IRS tried to gain jurisdiction in Canada
through various avenues. IRS was unsuccessful. Instead, Canadian courts upheld rights
of Canadian citizens.
In United States of America v Harden, Supreme Court of Canada stated: “A foreign State
cannot escape the application of the rule that in no circumstances will the courts directly
or indirectly enforce the revenue laws of another country…”
In Van denMark v Toronto Dominion, High Court of Justice stated: “One must
sympathize with the position of the bank but that position is the result of its election to
carry on business in more than one country and that cannot influence the application of
Canadian law.”
In Chua v Minister of National Revenue, a judicial review compared one group of
Canadian citizens (Convention citizens) and “all other Canadian citizens.” The court
stated: “First…Convention citizens have less rights than all other Canadian citizens.
Second, Convention citizens are deprived of fundamental justice…The impugned law has
a discriminatory purpose or effect.”
LEGAL ADVICE:
I, along with others, have consulted a prominent constitutional lawyer. We have been
advised if the banks violate any of the above laws, we have grounds for a lawsuit against
the banks. If the government changes the laws to accommodate a foreign government,
we have grounds for a Charter challenge against the Canadian government.
If my financial privacy and rights are in any way violated by my bank, my credit union or
by the Canadian government, I will pursue legal action.
I know many others are prepared to join in such legal action. We hope Canadian
government will ensure our fundamental rights are protected without the need for
adversarial legal proceedings.
RRSPs, TFSAs, RESPs, RDSPs, PENSIONS
Canada has superb savings vehicles such as RRSPs, TFSA, RESPs and RDSPs to
encourage responsible Canadians to save and invest in their future or their children’s
future. The programs have been strongly promoted by Canadian government with no
mention of the right of a foreign government to obtain information about them.
If my bank were to close my RRSP because I will not give information about my place of
birth or consent to release information to a foreign government, I would, of course, be
liable to pay Canadian taxes on the full amount withdrawn in one year. This would
create a huge financial hardship for my retirement.
CANADA-US TAX TREATY:
Canada and United States have had an effective tax treaty for 70 years to share
information on the income of each other’s residents. This makes Canada unique in
helping the US combat tax evasion.
This tax treaty should suffice. Nothing further should be expected, required or agreed to
by Canada.
INTER-GOVERNMENTAL AGREEMENT:
An IGA where Canada Revenue Agency would collect information on US persons to
submit to US does not address the core of the problem. No other Canadian citizen or
permanent resident is in danger of having his or her confidential financial information
provided to a foreign government.
In fact, no Canadian citizen or permanent resident must submit information to CRA on
the total of his or her savings, assets and transactions. We only must provide information
on income from those assets, which is, of course, taxed within Canada. This invasion of
personal and financial privacy for one group of Canadian citizens and residents should
not be permitted for the benefit of a foreign government.
If Canadian citizens and residents born in US (or born in Canada to a parent born in US)
were required to have such information submitted to CRA to submit to IRS, this would
mean:
We would “have less rights than all other Canadian citizens”
We would be “deprived of fundamental justice” and
We would be subjected to “a discriminatory purpose or effect.”
RECOMMENDATION:
Based on the above, IRS should not be able to inflict their draconian law on honest, lawabiding, tax-paying Canadian citizens and residents with bank accounts, savings and
investments in Canada. We should have the same right to manage our financial affairs
with our banks in privacy and with confidence as all other Canadians.
It is critical that the Minister of Finance tells Canadian banks they must adhere to
Canadian law. It is equally important that he tell Canadian citizens that Canadian laws
will not be changed to accommodate demands of a foreign government.
If China, Eritrea, Iraq, India, Russia or Mexico were demanding such information on
Canadian citizens, I am convinced Canadian government and Canadian banks would
quickly, firmly and strongly say “No.”
Canadian government needs to do exactly that to United States. The government needs
to tell the Americans that Canada values fundamental banking, privacy and equality laws
and that Canadian laws will remain in effect to protect all Canadian citizens and
residents. Finally, it is essential the Canadian government uphold our rights under
Canadian Charter of Rights and Freedoms.
Blaze Canadian
P.S. Why is Ministry of Finance only now asking for input? You have known about
FATCA for two years. Mr. Flaherty has been quoted in Globe Investor as confirming
negotiations are close to reaching a conclusion. Have decisions already been made and
agreed to without considering the views of Canadian citizens?