Looking for answers on FATCA
Working with MP Irwin Cotler, the Liberal Party critic for Rights and Freedoms, I’ve submitted a written Order Paper Question (Q-121) on the Foreign Account Tax Compliance Act (FATCA). Written Order Paper Questions are one way that MPs can ask the government detailed and technical questions, to be answered within 45 days.
When the United States adopted the FATCA in 2010, Americans living in Canada became worried. This controversial legislation requires ‘foreign’ banks to report directly to the IRS certain information about financial accounts held by ‘American’ taxpayers–even when those accounts are in local banks of lifelong Canadian citizens who happen to also have US taxpayer status under US law. The fact that the Canadian government is considering forcing Canadian banks to report directly to an American agency is worrying, but my colleagues in the Liberal Party are also concerned that implementing FATCA might infringe on Canada’s Charter of Rights and Freedoms.
FATCA is a very complicated piece of legislation, and it requires other countries to be on board, so the US has been using “inter-governmental agreements” (IGAs) to further FATCA’s reach. The US Treasury department has even been developing “model” IGAs for other countries to fast-track and streamline the process of expanding FATCA’s global reach.
The Conservative government has, once again, been tight-lipped about whether they will be pursuing an IGA and what it might look like, or even if it would bring any legislation like this to Parliament for a vote. It’s only fair that Parliamentarians should be able to review legislation before the government requires Canadian banks to enforce US laws.
Another possibility is that the Harper government might implement FATCA by “reinterpreting” the existing tax treaty with the US. Again, we face the possibility that parliamentary oversight could be side-stepped in favour of quickly implementing controversial legislation.
I think we need to be wary of imposing American obligations on Canadian banks and American taxpayers living in Canada – some of whom might have obligations under FATCA but not even know the law has changed. We should also be vigilant to make sure that implementing FATCA doesn’t violate the Charter. Constitutional law scholar Peter Hogg sent a personal letter to the Department of Finance last December to say that “In [his] opinion, the procedures mandated by the Model IGA are discriminatory in a way that would not withstand Charter scrutiny.“