Canada and the United States are neighbours, allies and friends. We share a common border and common values. One of those values is fighting tax evasion and ensuring that everyone pays their fair share.
Recently, the U.S. government introduced legislation called the Foreign Account Tax Compliance Act (FATCA), which will require non-U.S. financial institutions to enter into an agreement with the IRS to identify their U.S. account holders and report their account information to the IRS.
The U.S. also requires its citizens, including those living abroad, to file a U.S. tax return if they have income above the U.S. filing thresholds, and a Foreign Bank Account Report (FBAR) if they have more than $10,000 in non-U.S. accounts. These requirements apply to U.S. citizens resident in Canada, even if they are filing Canadian tax returns and paying Canadian income tax.
While we support fighting tax evasion and making sure everybody pays their fair share, our Government – like many – has concerns about the impact of FATCA and FBAR on Canadians.
For instance, many dual citizens affected by FBAR have complained they have only very remote links to the U.S. and a very limited knowledge of their tax reporting obligations to the U.S.
We recognize – and have publicly told the U.S. – that the vast majority of these dual citizens being targeted are honest, hardworking and law-abiding people – including many senior citizens – who have dutifully paid their Canadian taxes.
Their only transgression has been failing to file IRS paperwork that they were unaware they were required to file. These are not high rollers with exclusive offshore bank accounts looking to evade paying their fair share of taxes.