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US Tax Regulations Raise Privacy Concerns in Canada

September 30th

Canada has recently stepped up its opposition to US tax evasion laws by engaging with the American media. Most notably, the Canadian Finance Minister, Jim Flaherty, wrote an opinion piece, which was published in several major American newspapers, complaining that the new regulations are “wasteful and raise privacy concerns.”

Earlier this year, Flaherty had announced that he was in talks with US officials to exempt Canada from the new Foreign Account Tax Compliance Act (FATCA), which requires overseas banks to report any American clients to the Internal Revenue Service. However, the recent letter clearly indicates that Flaherty’s requests for exemption were not met.

Foreign Account Tax Compliance Act Violates Canadian Privacy

Flaherty’s chief argument against FATCA is that compliance would simply turn Canadian banks into extensions of the Internal Revenue Service, thereby creating significant privacy concerns for Canadian clients. In addition, he argues that Canada is not a tax shelter but merely has a large population of dual Canadian-American citizens.

The letter written by Jim Flaherty also takes significant offense with the requirement that dual citizens file tax returns with the IRS, claiming that the little-known law threatens ordinary, innocent citizens with debilitating penalties on supposedly unpaid taxes. Instead of pursuing serious perpetrators, he claims that US resources are misdirected toward those who are simply victims of ignorance.

 

 
 
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