I wrote about the Intergovernmental Agreement (in force as of July 1) enforcing FATCA data collection and transmission over at Canadian Taxation Professionals at LinkedIn:
Canadian citizens and residents who may be subject to the United States Foreign Account Tax Compliance Act (“FATCA”), and indeed many others who are not, may be subject to information about their Canadian bank accounts being supplied to the U.S.’s Internal Revnue Service (the dreaded “IRS”) under the new Canada-United States Intergovernmental Agreement which was agreed in February and came into effect last month.
The main upshot is that under the Agreement, Canadian banks are required to pass information along to CRA (which will pass it along to the IRS) about you and your accounts, if certain information is triggered on your account. This is regardless of your actual U.S. citizenship status. (For those unaware, the U.S. unlike most countries taxes all its citizens, and not only those resident in the country. This causes major headaches for people who are often unaware that they hold, or still hold, U.S. citizenship.)
The Agreement, which is subject to a new legal challenge (see http://business.financialpost.com/2014/08/12/canadian-government-faces-constitutional-challenge-over-fatca-deal/) and therefore in the news, has brought a new level of uncertainty to the very many Canadians who have significant ties to the U.S. and who may be caught by unusual U.S. rules about who they can tax and under what circumstances. Persons who are resident in Canada who have sufficient links to the U.S. to be concerned about FATCA or the Agreement, should seek advice regarding their U.S. citizenship and tax status to ensure that they will not face future problems in trying to travel to or through the United States, and to protect them from further action that the future may bring. The IRS is remorseless, doubly so to non-residents of the U.S.
For what it’s worth, on at least one major point I think the new legal challenge will fail, although it may succeed on others. In my view this is in essence a banking regulation, and therefore I imagine it would be well within the purview of federal government authority, despite the suit challenging it on the grounds that property and civil rights is a provincial responsibility. As to the Charter aspects, I couldn’t say until I have studied those issues further.
Note: the Canadian Bankers Association has a helpful backgrounder about the Intergovernmental Agreement including the kind of financial data Canada and CRA will be handing over to the IRS. It is available at http://www.cba.ca/en/consumer-information/40-banking-basics/597-fatca-and-the-canada-us-intergovernmental-agreement-iga-information-for-clients-