Evidence of meeting #31 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was question.
A video is available from Parliament.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
That's what the document says, but once it's in U.S. hands, Canada has no control over how it may be used in the United States.
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
That's right. There's a question of—as I say—the reliability of our treaty partner. We do take the view that we can rely on the U.S. to limit it's use of the tax information as, indeed, they rely on us.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
Indeed, so it might be that information could well find itself...as we've seen in other contexts with the United States taking our information. There's the USA PATRIOT Act, there are a number of other statutes where the information on Canadian/U.S. persons could well find its way into other entities. We're just relying on their statement that they're not going to do that.
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
Yes. That would be inconsistent with their commitments to us and their legislation, so it would only be on the basis that they were violating the agreement that it could happen.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
I'm sorry, regarding the question earlier about whether or not you did a study on the implications for the competitiveness of Canadian entities, if their information was found in the United States, has there been any analysis undertaken?
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
Well, the answer is no, because we challenge the premise of the question—
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
We exchange information already with the U.S. and with other treaty partners, on which we rely on the terms of the agreement we have with them.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
What about the interference with cross-border mobility of Canadian workers going to the United States, those with green cards, for example? They're going to be subject to costly tax compliance measures after they return to Canada. Has there been any analysis done of the implications for that sort of cadre of Canadian worker?
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
Forgive me, I'm not sure if I understand how they're affected in the way you suggest.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
Green card holders in Windsor, for example, people going across to the United States who actually work there, there may be enhanced scrutiny of their tax situation as a consequence of this FATCA. Are there any issues we need to be worried about with cross-border mobility? Maybe not.
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
I don't know of any. To take the specific example you raise, if there's a person who's living in Canada while a green card holder...so they're actually living in the U.S.?
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
Someone living in Canada and working in the United States under a green card, who goes back and forth regularly....
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
All right. Well, in those circumstances they'd be exposed, if you want to call it that, to the U.S. tax system already. Their income would be subject to U.S. tax by virtue of the U.S. employment.
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
Not that it occurs to me.
5:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
All right.
We talked earlier about the reciprocity of this, and a lot of people have been challenging that notion that this was reciprocal. Under international law, as I understand it, there need to be gains to both countries as a consequence of an international agreement such as this. I'd like to know if any analysis has been done of the gains to Canada we achieve by entering into an agreement of this sort.
I understand the lack of economic sanctions is a gain, if you will, but what about other gains for us? Is there a reciprocal agreement that the United States has entered into? Talk about those things, the gains and the reciprocity.
5:15 p.m.
General Director, Tax Policy Branch, Department of Finance
Thank you.
Thank you for acknowledging at least that there is this point about issues avoided. I think there also is the point that we do gain some additional information immediately from the U.S. in relation to the collection of taxpayer identification numbers, which will help in our own data matching. That's immediately.
It's not delivered immediately, but we also do have the commitment to full equivalence, if you will, over time.
There is one other thing I would add and you might consider this a soft point, but I think it's worthwhile. Even though FATCA itself started off kind of badly, in the sense that what it first proposed raised a lot of issues for a lot of us and a lot of taxpayers, the development of the intergovernmental agreement seems to us a good thing in terms of advancing exchange of information. It still has a lot of issues and in particular with the U.S. on citizenship, but as a matter of principle, it seems to us to be something that enhances taxpayer compliance.
The point I want to make is that I think as a result of the discussion around FATCA and the intergovernmental agreements, countries, particularly the G-20, have now moved forward in trying to adopt an automatic exchange of information procedure or standard. It's coming to be known as the common reporting standard. It's still under development, but G-20 finance ministers and G-20 leaders have committed to working to bring that to reality, and whether it's grudgingly or not, I think the FATCA discussion and debate has sort of led to some of that evolution.
5:20 p.m.
NDP
Murray Rankin NDP Victoria, BC
There are scholars who are going to be testifying at this committee who indicate that FATCA is “inconsistent” with the terms of the existing tax treaty we have between Canada and the United States because it “provides for appropriate changes to the treaty”. They say the intergovernmental agreement explicitly implements the FATCA agreement, but “superficially”. It only appears to meet the standard, and that the IGA introduces “an unprecedented asymmetry in the treaty”. They recommend that the government explain why normal treaty amendment processes haven't been followed and we have this asymmetry introduced into Canada.
Would you have any comments on that analysis, that lack of symmetry?
5:20 p.m.
General Director, Tax Policy Branch, Department of Finance
Just to help situate myself, these are comments by Arthur Cockfield or...?
5:20 p.m.
General Director, Tax Policy Branch, Department of Finance
Well, the immediate asymmetry and ongoing sort of quest for symmetry is something that can be the subject of comment, and people could think or suggest that Canada ought to have sought immediate symmetry or reciprocity or equivalence and not agreed to it without having done so. I would say what we've done on that basis is the same platform as the other 29 countries or jurisdictions that have agreed to it.
To respond more directly to the question, I don't understand it as a legal question. I think we can provide benefits to another country and they could provide different benefits to us. I don't think the fact that the suite, if you will, is different makes it an illegal agreement. That, I just don't understand.
5:20 p.m.
Conservative
