U.S. tax law puts privacy of Canadians in ‘jeopardy,’ NDP warns
May 5th, 2014 - 4:57pm
OTTAWA — The NDP is calling on the federal government to delay passing legislation aimed at cooperating with the United States in taxing its citizens living in Canada, saying the law could “violate the privacy and constitutional rights” of those residents and needs to be studied more closely.
The U.S. Foreign Account Tax Compliance Act (FATCA) requires Americans living outside the United States to pay taxes on annual income earned abroad.
A tax-information sharing agreement, signed by Canada and the U.S. in February, also affects those with dual U.S.-Canadian citizenship — and is part of Ottawa’s omnibus budget bill, C-31, now before Parliament.
In addition to individual compliance, the U.S. act would make it mandatory for Canadian financial institutions to pass on names of its U.S. account holders to the Internal Revenue Service, by way of the Canada Revenue Agency.
The changes are expected to come into full effect in 2015.
“FATCA would provide the U.S. government with sensitive personal information, sensitive financial information on approximately one million Canadians,” Murray Rankin, Opposition critic for national revenue, said Monday.
“Despite broad opposition and serious concerns that the agreement is deeply flawed and will violate the privacy and constitutional rights of Canadians, the Conservatives are charging ahead.”
FATCA, signed into law in 2010, is primarily aimed at limiting tax evasion and money laundering. Some estimates put the annual loss to the U.S. Treasury through offshore tax non-compliance at about US$100-billion.
Mr. Rankin called on the federal government to remove all sections of C31 relating to the inter-governmental agreement and to “delay its passage until the agreement can be properly studied.”
“The government has failed to do a proper cost estimate,” he said. “There’s no estimate of the costs to banks. Yet one bank has told us that that bank alone has had to spend $100-million to bring itself into compliance with this U.S. law.”
With the agreement of Canada, all members of the Group of Seven industrialized nations are now moving ahead with FATCA-related legislation.
Even so, NDP finance critic Nathan Cullen said Ottawa has failed on three counts: “Respecting the privacy and protecting the privacy of Canadians. On the price, the government has no idea what the costs is of implementing this agreement. And on process, using another massive omnibus bill to push through this piece of tax treaty.”