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.
Conservative
The Chair Conservative James Rajotte
Thank you, and thank you, Mr. Cullen.
For a final round, we'll go to Mr. Adler, please.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you very much, Mr. Chair.
I just want to make one clarification to Ms. Swanson. I in fact am the one who stated that the U.S. Congress has spoken. I freely admit that. When I said that, we were in Washington and pressing the Treasury Department on this whole FATCA thing, and the response we got back from the U.S. Treasury person was, “Well, I'm sorry, Mr. Allen, but Congress has spoken”.
We were somewhat mortified by her attitude as well, so I just want to say that this was the context of that comment.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Sure, quickly, if you could, because I don't have much time.
As an Individual
We would like Finance Canada to go back to the U.S. treasury and say that Parliament has spoken, and Parliament is going to stand up for Canadians—Canadian citizens and Canadian residents.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
That's why we signed the IGA.
I would like to go to Mr. Reed with my next question. One of the sections of annex 1 of the BIA says the following, in terms of reporting:
4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this section,
It then says:
a) Where the Account Holder information unambiguously indicates a U.S. place of birth, the Reporting [FATCA Partner] Financial Institution obtains, or has previously reviewed and maintains a record of: (1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes(2) A non-U.S. passport or other government-issued identification evidencing the Account Holder’s citizenship or nationality(3) A copy of the Account Holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
Are there ways, for instance, that a Canadian who may have been born in the State of Maine, for example, and was only born there by accident at birth, as their mother had to go there because it was the only hospital that was open—in respect of the filing in the U.S.—can get out from underneath this compliance reporting?
Attorney, White and Case LLP, As an Individual
I would have to look at that a little bit more closely. I think that plays with the question of who is a U.S. person for U.S. tax purposes. My understanding of the definition in the Internal Revenue Code is that it's very, very broad. As Mr. Cockfield talked about, that includes people who have had green cards for a temporary assignment. So I'm just not sure. I'd have to take that back, and I could follow up with you on that, but I just don't know the answer to that off the top of my head.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Yes, and that would be the filing on the FATCA side, but certainly on the filing of taxes, too.
Attorney, White and Case LLP, As an Individual
And on the compliance side, I don't know, but I would suspect that, as I said, the definition of a U.S. person is very broad under the Internal Revenue Code.
Conservative
Conservative
Mark Adler Conservative York Centre, ON
Thank you, Mr. Chair.
Mr. Cockfield, historically Americans have not come to Canada to pay lesser tax. Is that correct? Historically, it's the other way around, right? That's only kind of a recent phenomenon that Americans are relocating to Canada, wouldn't you say?
Professor, Faculty of Law, Queen's University, As an Individual
I wasn't even aware of that trend.
Professor, Faculty of Law, Queen's University, As an Individual
No, we're not a tax refugee place, Canada, no.
Conservative
Mark Adler Conservative York Centre, ON
The FATCA agreement didn't even pass Congress as a FATCA agreement. It passed as part of a jobs bill, so clearly some member of Congress wanted to fund something. He had a project he needed to fund, so he came up with this nice arrangement for himself. But having said that, there's not a whole heck of a lot we could do as a country, is there, in terms of influencing the U.S. legislative process—because that's what needs to be done at the end of the day, right?
Professor, Faculty of Law, Queen's University, As an Individual
Yes, at least in my view.
Again, I understand the chair's similar concerns, but I do believe that there should have been more political push-back. There could be a NAFTA tribunal challenge, other public international challenges under, say, WTO. I do respect the fact that the MPs did try to get some more concessions out of Treasury, but we either could have or still can do a better job at protecting Canadian interests.
Again, the problem is that we have the same deal that the Cayman Islands gets, and that's totally inappropriate.
Conservative
Mark Adler Conservative York Centre, ON
—what we need to do is just smooth out some of the rough edges of the whole thing, because FATCA is here. It isn't going anywhere, right?
Professor, Faculty of Law, Queen's University, As an Individual
Right, and that's why I suggested that it could be implemented, but at least on a temporary basis, and only with respect to U.S. citizens who are temporarily resident in Canada, as Ms. Swanson said.
Conservative
Mark Adler Conservative York Centre, ON
The economic repercussions of not complying with FATCA are going to be onerous for us as a country, right?
Professor, Faculty of Law, Queen's University, As an Individual
Potentially, that's the case, yes.
Conservative
The Chair Conservative James Rajotte
I apologize for ending this discussion. It was a very good one. I thank all of our panellists here in Ottawa, in London, Ontario, and in New York. Thank you so much for being with us here this afternoon.
Colleagues, you have about 13 minutes to get to the House to vote.
The meeting is adjourned.