Canada signs FATCA treaty
Feb 10th 2014, 2:02 pm
#16
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Re: Canada signs FATCA treaty
So just throwing this one out there. A friend of mine in the UK, let's call her Amy, is a bit worried about this, but she can't see how she'd ever get "found out", so curious to know your thoughts.
She was born in the UK, and identified as British. Has the accent, carries the passport, etc etc etc.
However, her dad is American. He went to the UK about 50 years ago and never left. Amy did get an American passport when she was in her teens - at the time, didn't really know about FATCA etc. She renewed it I think 5ish years ago, so it's valid for another 5 or so years (it's a 10-year passport).
She's never filed taxes in the US at all - she doesn't have a SSN. She was born in the UK, so it's not like her passport has a US city as her birthplace (which is the issue her father has). She's only ever used her UK passport to open bank accounts. She married a Canadian a few years ago and is now living in Canada. All her paperwork for PR was done using her British passport (though in her application passport she did say she also has an American passport in the "countries of citizenship" section), but otherwise her British passport has been used for all her dealings in and out both the UK and Canada.
So yes, she is technically an American, but she can't see any way that she would be reported - banks don't ask for your parents' citizenships when they open bank accounts... just for yours, and she's only been using British for that.
Any thoughts?
She was born in the UK, and identified as British. Has the accent, carries the passport, etc etc etc.
However, her dad is American. He went to the UK about 50 years ago and never left. Amy did get an American passport when she was in her teens - at the time, didn't really know about FATCA etc. She renewed it I think 5ish years ago, so it's valid for another 5 or so years (it's a 10-year passport).
She's never filed taxes in the US at all - she doesn't have a SSN. She was born in the UK, so it's not like her passport has a US city as her birthplace (which is the issue her father has). She's only ever used her UK passport to open bank accounts. She married a Canadian a few years ago and is now living in Canada. All her paperwork for PR was done using her British passport (though in her application passport she did say she also has an American passport in the "countries of citizenship" section), but otherwise her British passport has been used for all her dealings in and out both the UK and Canada.
So yes, she is technically an American, but she can't see any way that she would be reported - banks don't ask for your parents' citizenships when they open bank accounts... just for yours, and she's only been using British for that.
Any thoughts?
As a USC, she is liable to file US tax returns (assuming income was high enough) regardless of FATCA. Also, per US law, USCs should use a US passport to enter/leave the US.
Feb 10th 2014, 3:19 pm
#17
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Re: Canada signs FATCA treaty
Must be really unfortunate to be an American. The funny bit is most of them seem to think it's great 
Feb 10th 2014, 3:28 pm
#18
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Re: Canada signs FATCA treaty
http://en.wikipedia.org/wiki/International_taxation
Feb 10th 2014, 3:29 pm
#19
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Re: Canada signs FATCA treaty
Well what's happened in some other countries is that the bank simply has no US investments so they've given the IRS the finger because there's nothing to withhold tax against, but no Canadian bank could do that, they've all got US investments. So they will have to comply.
Feb 10th 2014, 3:32 pm
#20
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Re: Canada signs FATCA treaty
If you look at this link, only 2 countries in the entire world taxes non-resident citizens - the US and Eritrea.
http://en.wikipedia.org/wiki/International_taxation
http://en.wikipedia.org/wiki/International_taxation
Feb 10th 2014, 3:36 pm
#21
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Re: Canada signs FATCA treaty
Also the US-Canada tax treaty is pretty comprehensive so there are ways of dealing with RRSPs.
But it's not necessarily simple, in the press here in Calgary there was a case of a developmentally disabled teenager who is a US citizen, his parents died and he is looked after by friends of his parents. Because he is disabled he has an RDSP. Because an RDSP is not covered by the treaty, the earnings in the plan are subject to US income and capital gains taxes (not a huge sum, but still).
His guardians tried to get his US citizenship renounced, but the State Dept. rejected his application because he is not capable of understanding the paperwork or the consequences.
Feb 10th 2014, 3:40 pm
#22
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Re: Canada signs FATCA treaty
As far as FATCA is concerned, who really knows if she would be found out or not? Since she has a US passport, presumably they know that a person of that name, date of birth, place of birth, etc exists somewhere. Maybe the US will make available a database that foreign banks can crosscheck against.
As a USC, she is liable to file US tax returns (assuming income was high enough) regardless of FATCA. Also, per US law, USCs should use a US passport to enter/leave the US.
As a USC, she is liable to file US tax returns (assuming income was high enough) regardless of FATCA. Also, per US law, USCs should use a US passport to enter/leave the US.
She looked into what she'd need to do to file taxes - she doesn't have a social security number, and has never lived in the US at all... the process just to get all of that is a bit of a nightmare. Then she has to backfile for the past 5 years or whatever it is, and risks getting fined stupid amounts of money for not filing simply because she never realised that she had to, since she's never lived, worked, or earned money at all in the US.
She's not trying to get out of it, I was just wondering what everyone's thoughts were in this sort of situation.
She didn't ask me to post or anything, I was just curious.
Feb 10th 2014, 3:42 pm
#23
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Re: Canada signs FATCA treaty
http://www.philstar.com/business/201...w-perspectives
Feb 10th 2014, 3:43 pm
#24
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Re: Canada signs FATCA treaty
If I'm not mistaken, the only countries that tax on citizenship and not on residency is the US and Eritrea.
Feb 10th 2014, 3:49 pm
#25
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Re: Canada signs FATCA treaty
Page 20 onwards is the relevant bit.
Electronic Record Search. The Reporting Canadian Financial Institution
must review electronically searchable data maintained by the Reporting Canadian Financial Institution for any of the following U.S. indicia:
a) Identification of the Account Holder as a U.S. citizen or resident;
b) Unambiguous indication of a U.S. place of birth;
c) Current U.S. mailing or residence address (including a U.S. post office box);
d) Current U.S. telephone number;
e) Standing instructions to transfer funds to an account maintained in the United States;
f) Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or
g) An “in-care-of” or “hold mail” address that is the sole address the Reporting Canadian Financial Institution has on file for the Account Holder. In the case of a Preexisting Individual Account that is a Lower Value Account, an “in-care-of” address outside the United States or “hold mail” address shall not be treated as U.S. indicia.
must review electronically searchable data maintained by the Reporting Canadian Financial Institution for any of the following U.S. indicia:
a) Identification of the Account Holder as a U.S. citizen or resident;
b) Unambiguous indication of a U.S. place of birth;
c) Current U.S. mailing or residence address (including a U.S. post office box);
d) Current U.S. telephone number;
e) Standing instructions to transfer funds to an account maintained in the United States;
f) Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or
g) An “in-care-of” or “hold mail” address that is the sole address the Reporting Canadian Financial Institution has on file for the Account Holder. In the case of a Preexisting Individual Account that is a Lower Value Account, an “in-care-of” address outside the United States or “hold mail” address shall not be treated as U.S. indicia.
The main bit is (a), i.e. you told them you're a US citizen.
Feb 10th 2014, 3:52 pm
#26
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Re: Canada signs FATCA treaty
The Philippines does not tax the worldwide income of all of its citizens living abroad:
http://www.philstar.com/business/201...w-perspectives
http://www.philstar.com/business/201...w-perspectives
Feb 10th 2014, 3:56 pm
#27
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Re: Canada signs FATCA treaty
If she's a simple working stiff it's not that complicated. If she's got a broad investment portfolio etc. then yes seek professional help.
I would say she needs to do it because if the CRA knows she is a US citizen then so does the IRS as they share information.
Last edited by Steve_; Feb 10th 2014 at 3:58 pm.
Feb 10th 2014, 3:58 pm
#28
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Re: Canada signs FATCA treaty
Yes, it is based on residency like it should be. The US tax system affects the ability of its citizens to live freely in other countries without interference from the US government. Many are put off the idea of living abroad because of this. Others take the more drastic step of renouncing their US citizenship in an attempt to escape the clutches of Uncle Sam.
Feb 10th 2014, 4:02 pm
#29
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Re: Canada signs FATCA treaty
I don't think it's super difficult, you just to the local consulate, file an SS-5, get an SSN then file seven years worth of back returns. Which is mainly 1040 and 2555.
If she's a simple working stiff it's not that complicated. If she's got a broad investment portfolio etc. then yes seek professional help.
I would say she needs to do it because if the CRA knows she is a US citizen then so does the IRS as they share information.
If she's a simple working stiff it's not that complicated. If she's got a broad investment portfolio etc. then yes seek professional help.
I would say she needs to do it because if the CRA knows she is a US citizen then so does the IRS as they share information.
http://www.irs.gov/uac/IRS-Announces...tirement-Plans
Feb 10th 2014, 4:02 pm
#30
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Re: Canada signs FATCA treaty
It depends on your circumstances, if you have little in the way of investments and your income is below the foreign earned income exclusion limit, then yes it is pretty simple really, you just file in 1040 and do the 2555.
Also the US-Canada tax treaty is pretty comprehensive so there are ways of dealing with RRSPs.
But it's not necessarily simple, in the press here in Calgary there was a case of a developmentally disabled teenager who is a US citizen, his parents died and he is looked after by friends of his parents. Because he is disabled he has an RDSP. Because an RDSP is not covered by the treaty, the earnings in the plan are subject to US income and capital gains taxes (not a huge sum, but still).
His guardians tried to get his US citizenship renounced, but the State Dept. rejected his application because he is not capable of understanding the paperwork or the consequences.
Also the US-Canada tax treaty is pretty comprehensive so there are ways of dealing with RRSPs.
But it's not necessarily simple, in the press here in Calgary there was a case of a developmentally disabled teenager who is a US citizen, his parents died and he is looked after by friends of his parents. Because he is disabled he has an RDSP. Because an RDSP is not covered by the treaty, the earnings in the plan are subject to US income and capital gains taxes (not a huge sum, but still).
His guardians tried to get his US citizenship renounced, but the State Dept. rejected his application because he is not capable of understanding the paperwork or the consequences.
True. Mine are very easy, straight income, nowhere near a level the IRS is going to want me to pay anything, just fill a few boxes out, convert to US currency and off it goes.
I am aware some may have very complicated cases, but if its that complicated they would likely not do their own taxes anyhow.
I avoid all investments just so I don't have to deal with potential taxation issues and the IRS.
Anyone know how the IRS deals with government assistance payments? Last year I was on social assistance for a bit, but not sure if that is just recorded as income with earned income or if its something else?
Last edited by scrubbedexpat091; Feb 10th 2014 at 4:06 pm.