The Foreign Account Tax Compliance Act (FATCA) is a legislation that was passed in the US in 2010, However, starting in July 2014 all Canadian financial institutions will be required to report to the IRS all of the account balances of a “US Person”.

What does US tax law consider a “US person“?

• A citizen of the US (including an individual born in the US but resident in Canada)
• A lawful resident of the US (green card)
• A person residing in the US
• A person who spends considerable amount of time in the US on a yearly basis “Canadian snowbirds”
• US corporations, estates, and trusts

What is also worth noting is that the IRS Supplemental Notice 2011-34 lists additional criteria that, if they pertain to you, will make you eligible for scrutiny under FATCA:

1. A US residence address or a US correspondence address (including a PO box)

2. Transferring funds to an account maintained in the US or directions regularly received from a US address;

3. An “in care of” or “hold mail” address that is the sole address with respect to the client;

4. Having power of attorney or signatory authority granted to a person with a US address.

5. Married to a US person

What does this new law mean to the average Canadian Citizen?

Once again, less privacy, bigger government, and greater economic inefficiencies. Complying with FATCA will surely be expensive bureaucratic work and this expense will be pushed onto the consumer. I would not be surprised if banks start charging higher fees– fees that will rob the savings of the middle class, in addition to inflation. Of course, if you pertain to any of the criteria listed above, you may be under scrutiny by your bank and may be subject to a 30% withholding tax on US source income.

Bank and credit unions will be searching all accounts looking for any indications that you might be a “US person”. For instance, receiving funds from a US source is viewed as a “connection” to the US which will require you to validate your “US person” status and/or paying taxes on that income. Failure to comply may result in the closure of your account, thus providing limited options for Canadians due to the fact of Canada’s oligopolistic banking sector. Thankfully, there is an alternative option for Canadians. For more information on how to protect your savings, and how to get out of doge check this out here.

Although not quite the same issue, most people in Cyprus never saw their banking crisis coming. We are not saying there will be a banking crisis here in Canada, however, it is wise to be prepared for the worst case scenario. Besides the writing is on the wall even for Canadians with the so-called “bail-in” scheme that got introduced into the 2013 economic action plan at the beginning of the year.

Doug Casey eloquently clarifies how you can prepare for a banking crisis and what exactly you could be doing to mitigate these risks in the video below.

When governments get desperate, history shows that they deprives the wealth of its citizens either through inflation or by outright confiscation (As noted above by Cyprus). To quote Casey: “remember… your government considers you a milk cow.” No one will do the preparation for you, it is your responsibility to make sure it happens before its too late. The door is open right now, however, for how long? If times get tough, capital controls will most likely be enforced and then it would be much more difficult for any preparation.

More info on FATCA visit repealfatca.com