Evidence of meeting #34 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was fatca.
A video is available from Parliament.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Is that the current situation, or is that newly created under this IGA?
Director, US Tax Law, Moodys Gartner Tax Law LLP
That is under the IGA and also under the treasury regulations.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So if you're a financial institution, you determine whose information is going to be passed on to the CRA.
Director, US Tax Law, Moodys Gartner Tax Law LLP
You find out, yes, whether you had indicia of U.S. citizenship or U.S. personhood, and once that decision has been made, then there is a reporting to CRA.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
In your understanding, is that person the one who is subject to their information being passed on to the CRA, then eventually the IRS? Are they notified under this agreement?
Director, US Tax Law, Moodys Gartner Tax Law LLP
My understanding is that there is no obligation for notification under the legislation. I don't believe there was any notification requirement under the Canadian guidance notes. There is no notification obligation either in the IGA or under the Treasury rules.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Could you understand how somebody reading about this agreement, trying to understand whether it impacts them or their children, might want that amendment to be made in the agreement that we signed with the United States, to say, “Your financial institution deems you to be subject to this U.S. law and your financial information is about to be passed south of the border.“ As everybody admits, financial information is incredibly personal and important.
Would that be an amendment that your group or you as an individual would see as reasonable?
Director, US Tax Law, Moodys Gartner Tax Law LLP
I think that is very reasonable. If I were in that position, which I am, I would want that passed along. But I think the place for that is in the domestic legislation, not in the IGA itself.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Excuse me, in Canadian domestic or U.S. domestic legislation?
Director, US Tax Law, Moodys Gartner Tax Law LLP
I'm sorry, it should be in Canadian domestic legislation.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So this is something for the Canadian government.
I want to get Ms. Christians and her views on this aspect of who deems who is American, because in your case, Mr. Berg, it's relatively obvious that you have dealings across the border. We're hearing from constituents who may have been born in Canada, but by U.S. definition are American citizens, completely unaware. That's why the notification piece is becoming important to us, if people are being swept up unintentionally.
My last question--this is simply for a yes or no response--does the U.S. consider Canada a tax haven?
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So the aspect of Canada being a place where people go to avoid tax to the U.S. Treasury is not something that's entertained here.
Director, US Tax Law, Moodys Gartner Tax Law LLP
Probably not, but it could become a magnet for tax cheaters and avoiders.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I could have been prompting. If only wishing made it so.
Ms. Christians, could you comment?
Professor, H. Heward Stikeman Chair in Tax Law, McGill University, As an Individual
Does the U.S. consider Canada a tax haven? Maybe not now, but when we prove to them that we have hundreds of thousands of Canadians whom they believe are U.S. persons who are tax evaders, will they not change their focus and look at us very hard after that?
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
You've made some strong statements about this here today.
Understanding who a Canadian is and who an American is, is at the heart of whether the U.S. deems their incomes and their properties to be taxable. Again, we're hearing of people born in Canada but to American parents, or people who have left for 20 or 30 years and under U.S. law have run for political office, which by U.S. law says you're no longer an American. Is America the only country or one of only two that taxes by citizenship?
Professor, H. Heward Stikeman Chair in Tax Law, McGill University, As an Individual
It is not our job, I don't think, to change the U.S. law. We cannot change the law. What we can do is decide what we as a government are willing to do with respect to our citizens.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Thank you.
What everyone's generally saying is this is terrible but we have to do something, so this is something. Most of the banking institutions say they hate this law but they need something in its place, and in the absence of something I guess this will do.
Professor, H. Heward Stikeman Chair in Tax Law, McGill University, As an Individual
Yes, you have this law. You also have the law, which is called the revenue rule, that says that Canada will not lend assistance to any other country in their tax rules, and constructively that must mean that we do not hand people over, put them in a pen, put a spotlight on them and show the U.S. where they are and say come and get them. That can't be consistent with the revenue rule, which is law, too. And it's U.S. law, too.
NDP
Professor, H. Heward Stikeman Chair in Tax Law, McGill University, As an Individual
That is a question that I think--
Professor, H. Heward Stikeman Chair in Tax Law, McGill University, As an Individual
The courts will have to decide, and they will decide it. There is litigation, though, on both sides of the border on this and I think they will decide that. But I think we also have time. We have time to study these issues. I would love to have time to think about that and give a better answer.