Finance committee  I believe when I was here last time I made the point that automatic exchange of information is something that Canada supports in principle, but in practice it's quite difficult to do—for example, with a jurisdiction that does not have a tax system and thus does not collect any information to exchange with us. There are ways around it, as David Rosenbloom has mentioned. The U.S. FATCA essentially takes away the tax authority by imposing the obligation to collect and provide information, imposing that on the financial intermediary itself. That's a big deal, and quite a big change to the system, but that would be a possible way of trying to deal with that.

Questions Passed as Orders for Returns  With regard to the Canada Revenue Agency’s (CRA) response to the provisions of the Internal Revenue Service (IRS) regarding the Foreign Account Tax Compliance Act (FATCA): (a) according to the government’s analysis, do the FATCA provisions comply with the provisions of the Convention Between Canada and the United States of America With Respect to Taxes on Income and on Capital and its amending Protocol (2007); (b) how many citizens from the United States of America will be affected by FATCA, (ii) are there specific Canadian exemptions to FATCA; (c) has Canada negotiated with United States Treasury officials or the IRS following the announcement of FATCA provisions, (i) at what time was the government made aware of these provisions, (ii) how long did it take Canada to respond to the initial creation of FATCA and its implementation, (iii) are there ongoing negotiations in this regard; (d) will Canada inform dual citizens about FATCA and, if so, (i) how, (ii) at what time, (iii) what department or agencies will be responsible; (e) has the government conducted any studies or mandated a task force to look into how much FATCA will cost Canadians and, if so, what are the cost implications resulting from the additional regulations and demands, (i) for the government, (ii) for the CRA, (iii) for Canadian banks, (iv) who will absorb these costs, (v) are there other types of non-financial costs such as efficiency or fairness reductions; (f) which Canadian civil liberties associations or other types of association has the government met with to discuss the privacy implications of FATCA and what actions will the government undertake to protect the fundamental civil liberties of all Canadians in this regard; (g) according to the government’s analysis, do the FATCA provisions comply with the provisions of the Privacy Act or the Personal Information Protection and Electronic Documents Act, and if so, which department undertook this assesment; (h) in order to discuss the implications of FATCA, who within the government has met with (i) Canadian banks, (ii) other financial institutions, (iii) insurance companies; (i) how many complaints has the CRA received regarding FATCA, (i) what are the main complaints, (ii) what has the CRA done concerning these complaints, (iii) what department at the CRA is in charge of dealing with complaints of this nature, (iv) will the CRA cut Full-Time Equivalents from that department or reduce its funding, (v) has the office of the Taxpayers’ Ombudsman looked into the matter; (j) has Canada ever studied the development or implementation of a process similar to FATCA to improve tax compliance involving foreign financial assets and offshore accounts; (k) who will be most affected by FATCA and have concerns been raised by entities such as, but not limited to, (i) interests groups, (ii) stakeholder groups, (iii) hedge funds; and (l) will FATCA affect different saving vehicles such as, but not limited to, (i) Registered Retirement Savings Plans, (ii) Registered Education Savings Plans, (iii) Registered Disability Savings Plans, (iv) Tax-Free Savings Accounts?

Finance committee  The one example that others bring up, and that your institutions have brought up, certainly, with many members of this committee, is the problems with FATCA and in terms of a bilateral agreement. Perhaps as a follow-up, Mr. Purre, do you oppose automatic exchange between our tax authorities and other tax authorities unless it's done in terms of a multilateral framework?

Finance committee  Given that confluence of factors, could Canada be playing a leadership role in building global governance, with the operative vehicle being the G-20, to create a more effective vehicle than FATCA?

Finance committee  I want to start by referring to a point made by Ms. York. You indicated that, given your experience with FATCA, you are in favour of multilateral rather than bilateral agreements. This is something that we have been looking at. Could I get a quick yes or no from each of the witnesses as to whether you favour multilateral agreements or bilateral agreements?

Finance committee  Okay, I do want to follow up on that in terms of whether FATCA, as it's structured now, could be better structured or could be implemented in a better way.

Finance committee  When you move to some other forms of information exchange, such as automatic exchange of information—and that's the case through FATCA—the U.S. has been able to convince dozens of countries throughout the world to agree to an automatic exchange of information with them, or something that is equivalent to automatic exchange of information.

Finance committee  FATCA is unilateral legislation, and the way it has been implemented is largely through bilateral agreements. If a country wants to negotiate an agreement with the U.S., it can negotiate this agreement, which can be reciprocal or not reciprocal.

Finance committee  So is FATCA the best game in town in terms of.... Not to make perfection the enemy of the good, but is that what we ought to be focused on? Is that the best way?

Finance committee  What is interesting and has been mentioned by one of my predecessors in the panel is that a number of countries are moving towards automatic exchange of information, largely due to FATCA, the U.S. legislation, through bilateral agreements. There is now a move towards generalizing multilaterally the automatic exchange of information. Very quickly, the second pillar is about the emerging problem of what we call “double non-taxation”.

Finance committee  Without investigations or prosecutions there can be no convictions, and as a consequence no deterrence. To that end, I would ask the committee to perhaps look at something similar to the U.S. FATCA rule. That has its criticisms, because it is essentially the extraterritorial application of U.S. law. However, if you can't get information government to government, you can do what the U.S. did—namely, try to get information directly from financial institutions.

Finance committee  You've spent quite a bit of time with us over the years. You have expressed concern over FATCA, particularly over document retention requirements and the complexity of the act. But you've also spoken in favour of intergovernmental agreement processes the U.S. is developing with a number of European countries, including the U.K.

Finance committee  Again, I'll let my colleague talk about FATCA.

Finance committee  I think what you're alluding to would be for Canada, in effect, to try to do its own variant of FATCA, and for a number of reasons that have been articulated, that simply hasn't worked.

Finance committee  Mr. Cockfield, from the U.S. perspective, do you think FATCA has worked as well as originally anticipated?