Finance committee  Good afternoon, Mr. Chairman and members of the committee. My name is Roy Berg. I'm a U.S. tax lawyer with Moodys Gartner. I was born, raised, and educated in the U.S. I practised in the U.S. for 17 years in tax law before immigrating to Canada three years ago. Therefore, I thin

Finance committee  Right now that's the biggest issue that we have with the draft legislation. Under the draft legislation, private trusts, private holding companies, are not Canadian financial institutions. They're not FIs. And for those type of entities that have purely Canadian affairs, that's g

Finance committee  It changes every day.

Finance committee  Yes, exactly. Who's right? We know that you're just doing the legal analysis. We've come up with a different answer than the Department of Finance has. It doesn't mean that the Department of Finance is wrong, but if we look to other jurisdictions such as the U.K. and how they've

Finance committee  And so the U.K. mirrored the definitions found in the regs.

Finance committee  That's a very good point, and thank you for your question. Several jurisdictions have asked the U.S. to enter into memoranda of understanding where there are questions as to interpretation of the IGA. The reason that you would enter into the memorandum of understanding is precis

Finance committee  It seems that they are doing that.

Finance committee  It is an information grab, I would say. When we look at the actual tax dollars collected from U.S. citizens residing abroad, the IRS came out with statistics two years ago that said only 6% of any returns filed from abroad ever owe any U.S. tax. This is not a big tax grab; it's

Finance committee  Is that 800 million U.S. citizens residing in Canada?

Finance committee  I don't have that figure, I'm sorry.

Finance committee  But only 6% owe any U.S. tax.

Finance committee  The IGA, in fact, has its own set of rules. But as I said before, your treasury is aware that model 1 IGAs require domestic law to implement. So there is the potential for some deviation from existing definitions.

Finance committee  If some banks don't comply, then under FATCA, they would be non-participating financial institutions, and there would be a 30% withholding tax on them. And that's a withholding tax and not a withholding-against tax. It is a tax. You don't get it back. Under the IGA, Canadian fin

Finance committee  It is in the Canadian banks' best interest to be a participating financial institution, that's correct.

Finance committee  First of all, the seminal question is, are you a financial institution or not? If you're a financial institution under Canadian law, then you're obligated to do certain things. Those certain things include figuring out who your U.S. citizen depositors are.