Interesting article, Canadian Passport losing its perceived charm?

[May2010applicant]

Canada may limit services for dual citizens
Taxes and banking curbs could apply to Canadians living abroad for more than 5 years

If you’re a Canadian with dual citizenship and outside Canada, Ottawa bureaucrats consider you a citizen ‘of convenience’. And they plan to to curb your rights to government services and benefits, make you pay more in taxes and prevent you from having a Canadian driving licence or having an active bank account there.

But the stricter rules would also apply to Canadians and take effect after five years living away from Canada.

Officials believe there are 2.8 million Canadians living around the world. It’s estimated that there are 40,000 Canadians currently living in the UAE — though many more are likely to have Canadian passports as dual citizenship.

A spokesman from the Canadian embassy in Abu Dhabi could not provide comments to Gulf News before press deadline.

Among the ideas floated are:

*Canada would limit consular services only to Canadians who live overseas for less than five years;

*Consular services could only be used based on tax status;

*Driving licences and access to bank accounts would be used to determine tax status and hence access to consular services, and;

*Ottawa would limit service at embassies and consulates based on the passport in use.

While the proposals would be difficult to monitor and are at the proposal stage, one possible outcome is that Canadian passport holders who want to use consular services in Abu Dhabi or Dubai might have to show residence permits before services are rendered — posing a difficulty for dual-nationality Canadians who use their other passport and nationality to live and work in the UAE.

The proposals were put together by senior officials with the Department of Foreign Affairs and International Trade (DFAIT) and are contained in a briefing document now with Canada’s Minister of Foreign Affairs, John Baird. The proposals came to light in a document released to the Canadian media under a Freedom of Information Act request.

The clampdown on dual citizens was spurred by the 2006 invasion of Lebanon by Israel in 2006. Then, some 44,000 Lebanese-Canadians had to be evacuated — a number that caught Ottawa officials off guard.

In 2009, the Harper government changed birth-right access to Canadian citizenship, limiting passport rights to one generation if residing outside Canada. In effect, if you’re Canadian and live outside Canada, your child would qualify to be Canadian. Grandchildren are not granted Canadian citizenship if born outside Canada.

According to the briefing paper, Ottawa has had to intervene 50 times in 36 separate international crises over one 15-month period and the proposals with Baird are considered to be one way of saving money. A copy of the document has been obtained by Gulf News, with heavily redacted sections and details for each country where Canada has had to intervene to help its citizens.

“Recent crises have highlighted that many Canadian passport holders have limited connection to Canada, seen by some as maintaining a ‘citizenship of convenience’,” the document says.

The briefing paper suggests that Canadians who travel overseas or work overseas on the passport of another country should have limited access to consular and government services.

One of the proposals suggests that if you live outside Canada for five years, a new passport will cost you $500 (Dh1,672).

“Consideration could also be given to different levels of service to dual nationalities who choose not to use a Canadian passport when travelling or living abroad,” the paper says.
http://gulfnews.com/news/gulf/uae/visa/canada-may-limit-services-for-dual-citizens-1.1277888

 

[May2010applicant]

More on it from Doug Saunders of The Globe and Mail

Deny assistance to Canadians living abroad? It won’t work

It must have sounded like a good idea in the back office. Someone at the Department of Foreign Affairs noticed that Canada’s embassies have long lineups in their downstairs consular offices, where Canadians travelling and living abroad seek help with travel emergencies, medical problems, arrests and legal troubles abroad, foreign visa hassles and sometimes flight from major disasters and military conflicts. It costs money to staff those lineups. And someone observed that many of those people in the lineup have been away from Canada for a long time. Some of them have other passports.
So, an unnamed official has suggested to Foreign Minister John Baird, why not eliminate consular services, or scale them back sharply, for Canadians who have other passports or who have been living abroad for years? It could save millions, and end the awkward problem of “Canadians of convenience” – people who hold Canadian passports for travel purposes despite having lived abroad for years or decades.

It might sound good – there are indeed at least some people out there who are Canadians on paper only, and have few tangible ties to their country of citizenship – until you think about it.

On practical grounds, it would not work: How would Canada ever determine who is a “legitimate” Canadian citizen and who is a mere “Canadian of convenience?”

Dual citizenship is not a useful way to draw the line: of the thousands of Canadians who have it, a great many are committed, well-connected Canadians. Canada does not require you to give up your previous citizenship when becoming Canadian, and who would? Canadians are not required to disclose if they have other citizenships, and there is no consistent way to determine this.

And many undeniably “real” Canadians, in order to live and work abroad, have to take other citizenships: Much of the London financial industry is run by Canadians who also hold British citizenship. Are we really going to declare that Mark Carney, the governor of the Bank of England, is ineligible for Canadian consular assistance? Would we simply punishing our own most successful citizens for their very international success?

Many people hold Canadian citizenship while living for years or even decades abroad, in order to obtain crucial skills and business successes, which they then bring back to Canada later in life, creating some of our country’s greatest success stories. Do we want to punish such binational successes?

The other suggestion, that we cut off consular assistance by some measure of loyalty to Canada – time spent in Canada, taxes paid in Canada, number of trips back to Canada – sounds superficially more workable. After all, Elections Canada (rightly) forbids Canadians from voting in elections if they’ve been away for five years; why not do the same for consular help?

But this would be nearly impossible to implement: It would require a regime of reporting and record-keeping that does not currently exist, and whose implementation would almost certainly cost more than the savings in consular staff hours.

And it would need to be very well-run indeed, because the risks are horrendous: Do we really want to create a situation where we will refuse to come to the aid of a Canadian citizen in deep trouble, just because she has a good job abroad and hasn’t had the wherewithal to take a trip home for a couple years? Do we want to risk having a Canadian die abroad of a treatable malady, or suffer torture in a foreign prison, because we have inaccurately gauged their days spent in Canada?

It would be near-impossible to implement, open to tragic flaws, and probably unconstitutional.

Far better to deal with the problem of “Canadians of convenience” using a policy change suggested by Chris Alexander, the minister of citizenship and immigration: Change the rules for obtaining Canadian citizenship so that you’re required to have lived in Canada for four out of the last six years, rather than three out of the last four years.

This longer residency requirement would put Canada in line with many other Western countries. And it would solve the problem at its source, rather than through an awkward, expensive, inhumane and probably illegal attempt to deny assistance to Canadians abroad.

http://www.theglobeandmail.com/globe-debate/deny-assistance-to-canadians-living-abroad-it-wont-work/article16323036/

 

[on-hold]

I find it hard to imagine that this will be done -- dual citizenship is common these days, what about Canadians who study in the U.S. on an American passport? It would be silly to require them to use their Canadian passport, just as if a Canadian wants to work in Dubai, it would be absurd for them to not use a United Arab Emirates citizenship, if available. These people aren't mooching off of Canada, they are saving money that will very likely come back here at some point. Why is Canada so afraid of having Canadians out in the world?

I don't understand this continued reference to the Lebanon affair -- if Canada simply behaved like every single country in the world, and refused to do anything with dual citizens who are in their own country (as is standard practice), there would have been no expense, no 'waste of resources'. Even the U.S. adheres to this rule, and they have the force to do otherwise, if they wished. A U.S.-Lebanese dual citizen in Lebanon is on their own, as far as Washington is concerned.

Why does it matter what passport a Canadian is using? If they are Canadians, and not in their other country of citizenship, they deserve consular aid. If this is really such a big deal, institute a head tax on Canadians living abroad -- $100 per adult per year. That would be perfectly reasonable, and you could get away from all this stupid moralizing about Canadians of convenience. The chance that someone who truly needs help in a crisis gets turned away because it's impossible to check records in the heat of the moment is not worth risking.

 

[May2010applicant]

Nicely summed up on-hold.

Unfortunately (or may be because I am panicking as the time to make a move to Canada has finally arrived) all we read in the news these days is negative about the prospects of Canada generally, and for immigrants particularly…. from worst healthcare system in OECD to bad economic outlook. It is surprising to see how quickly Canada is losing its exemplary position earned throughout the recent modern history. I am confused and really not sure about my decision anymore!!!

As the reserves dry off and deficit increase, I guess more and more benefits will be taken away from ordinary citizens to give more rebates and benefits to banks and other financial institutions. It all makes sense how the banks are now posting record profits in recent quarters despite the ongoing turmoil faced by other sectors of the economy.

http://www.cbc.ca/news/health/canadian-patients-wait-longest-to-see-family-doctors-1.2501468

http://ca.finance.yahoo.com/blogs/balance-sheet/canada-economy-losing-haven-reputation-report-202435054.html

I find it hard to imagine that this will be done -- dual citizenship is common these days, what about Canadians who study in the U.S. on an American passport? It would be silly to require them to use their Canadian passport, just as if a Canadian wants to work in Dubai, it would be absurd for them to not use a United Arab Emirates citizenship, if available. These people aren't mooching off of Canada, they are saving money that will very likely come back here at some point. Why is Canada so afraid of having Canadians out in the world?

I don't understand this continued reference to the Lebanon affair -- if Canada simply behaved like every single country in the world, and refused to do anything with dual citizens who are in their own country (as is standard practice), there would have been no expense, no 'waste of resources'. Even the U.S. adheres to this rule, and they have the force to do otherwise, if they wished. A U.S.-Lebanese dual citizen in Lebanon is on their own, as far as Washington is concerned.

Why does it matter what passport a Canadian is using? If they are Canadians, and not in their other country of citizenship, they deserve consular aid. If this is really such a big deal, institute a head tax on Canadians living abroad -- $100 per adult per year. That would be perfectly reasonable, and you could get away from all this stupid moralizing about Canadians of convenience. The chance that someone who truly needs help in a crisis gets turned away because it's impossible to check records in the heat of the moment is not worth risking.

 

[torontosm]

These people aren't mooching off of Canada, they are saving money that will very likely come back here at some point. Why is Canada so afraid of having Canadians out in the world?

The debate of citizens of convenience is far greater than what you have stated. Canada is not afraid of having its citizens outside, but is terrified of the cost of supporting them without having them contribute anything to the country. In your example, Canadians living in Dubai, according to you, aren't mooching off of Canada. However, their children will attend Canadian schools and universities at subsidized rates, they are eligible for Canadian healthcare for free, they can qualify for a pension after retirement, etc. So, despite your assertion that there is no mooching, there is still a cost to Canadian taxpayers.

I don't understand this continued reference to the Lebanon affair -- if Canada simply behaved like every single country in the world, and refused to do anything with dual citizens who are in their own country (as is standard practice), there would have been no expense, no 'waste of resources'. Even the U.S. adheres to this rule, and they have the force to do otherwise, if they wished. A U.S.-Lebanese dual citizen in Lebanon is on their own, as far as Washington is concerned.

I think this is exactly what is being proposed.

If this is really such a big deal, institute a head tax on Canadians living abroad -- $100 per adult per year.

$100 per year won't do much at all. I think the government should consider taxing the incomes of all citizens, regardless of where they live, like the US does. I'm sure that will make people reconsider obtaining a Canadian passport for the sake of convenience.

 

[on-hold]

I'm not sure I agree with this -- to me, the debate over 'Canadians of convenience' is a very parochial one. I have never heard it in the United States, for example; and it often does sound like a fear of having a cosmopolitan class of international Canadians. Has anyone ever asked, for example, if these hypothetical 'Canadians of convenience' are actually people in the process of becoming more Canadian? The parents immigrate, obtain passports, and then work wherever they can make the most money -- something that is very, very normal. They save money, their children attend school in Canada -- a lot of that money will end up in Canada, with their children, in houses and tuition and bank accounts. The children become more Canadian than the parents; some stay for shorter times, some for longer times, some permanently, and they have connections outside Canada that contribute to business and life. There have always been trans-national merchant classes that move between different cultures -- Canadians may not be one, but Canadians of convenience may be.

I have never seen any statistics that suggest large numbers of Canadians of convenience live their lives outside Canada and then return here for expensive health care in their old age -- I don't imagine that many people, when they are old and sick, suddenly think that they want to go live in a country they have been out of for decades, away from their family and community, to be sick. Especially given how expensive Canada is, relative to many countries. If these families have money, they can purchase health care more cheaply where they are; if they don't, coming to Canada when old is not going to be so fine.

The real question about Lebanon is, why did Canada get involved? It has nothing to do with Canadians of convenience, and everything with why the government of Canada decided that this was its responsibility.

Also, the U.S. doesn't tax worldwide income, it requires expatriate Americans to file on their worldwide income, and pay taxes on a variable amount (depending on tax treaties) on income over ~90,000 dollars (I forget the real figure). If you're working for a foreign company, or your own business, doing this depends on self-declaring how much you earn, and the govt. has very limited ability to check on that. I suppose it's immediately obvious how this would fail to collect very much money. The real tax on worldwide income that America receives comes from people working abroad for the U.S. government or U.S. companies that make large salaries that are reviewable by the IRS. Since the average expatriate doesn't use many consular services (i.e. none, or an occasional passport renewal), I think that a $100 tax on all expatriates would go quite far to alleviating this burden.

 

[on-hold]

Nicely summed up on-hold.

Unfortunately (or may be because I am panicking as the time to make a move to Canada has finally arrived) all we read in the news these days is negative about the prospects of Canada generally, and for immigrants particularly.... from worst healthcare system in OECD to bad economic outlook. It is surprising to see how quickly Canada is losing its exemplary position earned throughout the recent modern history. I am confused and really not sure about my decision anymore!!!

As the reserves dry off and deficit increase, I guess more and more benefits will be taken away from ordinary citizens to give more rebates and benefits to banks and other financial institutions. It all makes sense how the banks are now posting record profits in recent quarters despite the ongoing turmoil faced by other sectors of the economy.

http://www.cbc.ca/news/health/canadian-patients-wait-longest-to-see-family-doctors-1.2501468

http://ca.finance.yahoo.com/blogs/balance-sheet/canada-economy-losing-haven-reputation-report-202435054.html

You're already Canadian . . . because one trait of Canadians is that they obsess a little about their position in the world. Canada doesn't have the worst health care in the OECD, it's middle of the pack, good for some things, worse for others. Two years ago Canadians were convinced their economic outlook was the best in the world, now they're down on it. An economic outlook doesn't change that fast, mostly they are moaning about unemployment and the drop in the loonie. One of these will help the other . . . Canada is an awesome country, it has a fundamental soundness in the rule of law and financial institutions, and it will have ups and downs relative to the United States, on a few measures, but it will maintain a more fair society through them. Don't worry about things like short-term unemployment rates and exchange rates, in fact you should be happy if you are coming here now, your foreign currency is worth 9% more than a month ago! I came when the loonie was at its record high . . .

 

[torontosm]

I'm not sure I agree with this -- to me, the debate over 'Canadians of convenience' is a very parochial one. I have never heard it in the United States, for example; and it often does sound like a fear of having a cosmopolitan class of international Canadians.

you don't hear about it in the States because American citizens (despite what you say) have to pay tax on global income, regardless of where they live. So, in effect, every citizen contributes and then can draw upon the benefits. Secondly, America doesn't have the same public benefits (i.e., free healthcare) as Canada does.

Also, the U.S. doesn't tax worldwide income, it requires expatriate Americans to file on their worldwide income, and pay taxes on a variable amount (depending on tax treaties) on income over ~90,000 dollars (I forget the real figure).

According to this link to the IRS site, as an American citizen "your worldwide income is subject to U.S. income tax, regardless of where you reside":

http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad

There are indeed exemptions on a certain amount of income (the exact amount is $100,000 per household plus a housing allowance), and relief provided according to tax treaties, but regular returns must still be filed and taxes paid. Failure to do so can result in fines or even jail time. As for your comment about the inability of the US government to check, I would refer you to all the press coverage about the crackdown on banks that open accounts for US citizens. There is a lot of oversight and now even Swiss banks must disclose information on assets held, and deposits made, by Americans. So, the US Government does have insights into this and can easily find out which citizens are following the law and which ones aren't.

I think if Canada did the same, no one would complain about citizens of convenience because we would all then be equally sharing the tax burden.

 

[on-hold]

I don't understand what you mean by 'despite what you say' -- you yourself point out that the exemption is somewhere around 100,000 dollars. You realize, don't you, that that means that if you earn less than 100,000 dollars, you don't pay any taxes? You have to FILE your taxes, but you don't owe any. And when you file your taxes, you normally don't have the same kind of evidence (W2 form) that you would submit if you worked within the United States. In other words, as I pointed out, unless you're working in certain particular situations, it's easy to hide income. If you can't hide income, the amount you owe is usually reduced or eliminated by tax treaties. The link that you posted has many other links -- one of them explains the exemption, which is basically qualified for if you live in another country:

http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

And this is before we even get to tax treaties. In other words, the 'worldwide taxation' of Americans is greatly exaggerated. It is more like 'worldwide duty to file taxes'.

Your comment about the banks is irrelevant -- that is looking at capital and taxes on capital, not earned income. Tell me how the U.S. government will determine if I'm accurately reporting my income from a private college in Thailand?

Tens of thousands of Americans live in Thailand (where I used to) and Laos, as retirees, expatriates, NGO workers, returned refugees, and general layabouts. Very, very few of them pay any taxes to Washington -- their own pay is too low, and even if they're making more than 100,000 dollars, it's easy to hide. You could call them 'Americans of convenience' but no one thinks to, because Americans aren't upset by other Americans living abroad.

For Canada to institute this would require the creation of a massive bureaucracy, trying to reduce fraud. It would be expensive and ineffective -- can you imagine trying to figure out if someone is under-reporting their income in Dubai? Or accurately describing how many children they have?

If Canada did this, people would not be equally sharing the tax burden, Canadians abroad would be shouldering a disproportionate share in return for very few services. Perhaps they should demand that if they pay full taxes worldwide, they get the full health care benefits also, no matter where they are?

 

[on-hold]

I've called the Canadian attitude parochial -- here is one that's not, it's from the time of the Lebanese evacuation:

Prime Minister John Howard said last week that dual citizenships offer economic opportunities because many countries limit what foreigners can do. "We want Australians to become the worldwide managing directors of the multinational companies," he said.

Tell me again why it's wrong for Canada to be part of transnational mercantile associations? What possible benefit could Canada get from close ties to a backwater like Hong Kong? Immigrants should work in pulp mills!

 

[May2010applicant]

You're already Canadian . . . because one trait of Canadians is that they obsess a little about their position in the world. Canada doesn't have the worst health care in the OECD, it's middle of the pack, good for some things, worse for others. Two years ago Canadians were convinced their economic outlook was the best in the world, now they're down on it. An economic outlook doesn't change that fast, mostly they are moaning about unemployment and the drop in the loonie. One of these will help the other . . . Canada is an awesome country, it has a fundamental soundness in the rule of law and financial institutions, and it will have ups and downs relative to the United States, on a few measures, but it will maintain a more fair society through them. Don't worry about things like short-term unemployment rates and exchange rates, in fact you should be happy if you are coming here now, your foreign currency is worth 9% more than a month ago! I came when the loonie was at its record high . . .

Thanks for the encouragement "on-hold" and highlighting the positive aspects of Canadian society

 

[torontosm]

I don't understand what you mean by 'despite what you say' -- you yourself point out that the exemption is somewhere around 100,000 dollars. You realize, don't you, that that means that if you earn less than 100,000 dollars, you don't pay any taxes?

Yes, the exemption is $100k, but many American expats receive compensation packages that put their earnings well above that. And, they pay taxes on the incremental amount.

And this is before we even get to tax treaties. In other words, the 'worldwide taxation' of Americans is greatly exaggerated. It is more like 'worldwide duty to file taxes'.

Tax treaties are irrelevant and are solely designed to avoid double taxation. In countries in the Middle East, to use the example that you did, there are no taxes so any treaty is a moot point as Americans pay tax on all income over the allowed exemption amount.

For Canada to institute this would require the creation of a massive bureaucracy, trying to reduce fraud. It would be expensive and ineffective -- can you imagine trying to figure out if someone is under-reporting their income in Dubai? Or accurately describing how many children they have?

It's actually not that hard. Similar to what banks do for American citizens now, when you open any account, you must report your nationality. Banks are then responsible for providing information to the US government on transaction activity for all American citizens. How do you hide your salary coming into your bank account month after month? Yes, dual citizens can try to use their other passport, but most countries require the Id used to be the only that carries the local residency visa, so that makes it more difficult.

If Canada did this, people would not be equally sharing the tax burden, Canadians abroad would be shouldering a disproportionate share in return for very few services. Perhaps they should demand that if they pay full taxes worldwide, they get the full health care benefits also, no matter where they are?

No system is perfect, but perhaps a system could be implemented whereby Canadians residing abroad are subject to lower income taxes than those living here. Even that would be more fair than the current system where a portion of the citizen population work and contribute to provide benefits to those that have never contributed anything. And as for your point, there are many provinces (e.g., AB) where citizens qualify for health care benefits without any waiting period, so Canadians abroad can avail full health care benefits no matter where they are. It's just that they can do so for free today, and I'd like to see that changed.

 

[on-hold]

You might be right, that in a mobile world the free rider problem will get worse, I can't disagree with that. I don't think pensions are a big deal, and I do wonder how many aging people with weak links to CAnada want to come back for an extended bout of chronic disease in their old age, but there must be some. Do you think it's greater than the number of low-income Canadians who never pay much tax through their lives and use a lot of services (some involuntary, like prison)?

And you're right about Dubai as well, I never think of places like that. I do think you're overestimating how simple it would be to gather tax information, or structure expat remuneration so it doesn't show up.

 

[torontosm]

I don't think pensions are a big deal, and I do wonder how many aging people with weak links to CAnada want to come back for an extended bout of chronic disease in their old age, but there must be some. Do you think it's greater than the number of low-income Canadians who never pay much tax through their lives and use a lot of services (some involuntary, like prison)?

I'm not sure how many aging people would want to come back to Canada for pensions alone, but I know that many want to return for the healthcare. This is particularly true after they retire and don't qualify for employer-sponsored group health insurance in other countries.

I'm not fussed about people who can't afford to contribute availing of services. Its those that can afford to contribute but don't, and then return (or send their families) to Canada to take advantage of the schooling, healthcare, tax benefits, etc. that irk me. There are so many cases of families whereby the husband is living in the Middle East, for example, not paying taxes on any of his income (as a declared non-resident) while the rest of the family is in Canada receiving child tax benefits, free schooling, free healthcare and, in some cases, welfare. How is that fair to the rest of us who have to pay for this?

 

[on-hold]

I agree, that is a scam -- but it's important to point out that at least part of it is illegal, the family here should be declaring their husband's income when they file for taxes. I think if they do that, they wouldn't qualify for low-income benefits.

As for the schooling, hospital care, and stuff like that, it probably balances out at some point. In that situation, the family isn't paying taxes in Canada, but probably a fair chunk of their Dubai income is going to be money that enters the Canadian economy, which is a less-direct but still useful effect. If they buy a house, they'll pay property taxes.

I actually do understand the worry about this -- but it should also be grounded in facts and not anecdotes. The fuss that Reagan caused about 'welfare queens' had a poisonous effect on U.S.politics that still lingers; Canada needs to figure out how it is going to balance its robust social programs and ambitious immigration program in a mobile world. Immigrants aren't laborers any more, they're educated professionals -- and it would be good to know as well how many of the hypothetical Middle-Eastern based Canadians of Convenience would actually LIKE to work in Canada, but can't find appropriate jobs. It might be that the process of immigrating is becoming a little more convoluted.