Petros provides a scenario which would suggest that the Human Rights Act does not protect U.S. Citizens living in Canada, as they do not have equal opportunity with other individuals, because under the Tax Treaty the CRA will collect taxes for the IRS.
Taxpayer A works and pays taxes in Canada. He uses the following types of accounts: RRSP, RESP, RDSP and TFSA. He enjoys the tax advantages of these programs. He also enjoys investments that pay Canada eligible dividends.
Taxpayer B works and pays taxes in Canada. But taxpayer B is a US citizen (but not a dual citizen with Canada). He also has the following accounts: RRSP, RESP, RDSP and TFSA; but only the RRSP is eligible for tax deferal under the United States and Canada tax treaty. Canada eligible dividends are taxed at higher rate in United States. So Taxpayer B finds that he has to pay taxes in the United States in addition to everything he has already paid in Canada.
The Human Rights Act of Canada states (Article 2):
The purpose of this Act is to extend the laws in Canada to give effect, within the purview of matters coming within the legislative authority of Parliament, to the principle that all individuals should have an opportunity equal with other individuals to make for themselves the lives that they are able and wish to have and to have their needs accommodated, consistent with their duties and obligations as members of society, without being hindered in or prevented from doing so by discriminatory practices based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability or conviction for an offence for which a pardon has been granted.
I wager thus that the US-Canada tax treaty, which treats U.S. citizens in Canada differently then every other resident, is in conflict with the Human Rights.
Suppose Taxpayer B sends his tax information to the IRS, and the IRS assesses him taxes in excess of everything he has already paid in Canada. He refuses to pay. Then, the CRA apparently will collect for the IRS what taxpayer B owes. Taxpayer B does not have the opportunities equal to those of Taxpayer A, as he does not have access to the same tax shelters, since the United States does not recognize these shelters as falling under the scope of the tax treaty.
In addition, Taxpayer B is not equal to a Canadian citizen who has dual citizenship with the United States, since the Canadian government has stated that it will not collect taxes from any Canadian citizen, whether or not that person is also a United States person.
Furthermore, inasmuch as an Eritrean has the right to freedom from the 2% Eritrea’s extra-territorial tax and Eritrea’s tax collecting activities in Canada considered to be illegal, Taxpayer B has less rights than people of Eritrean origin living in Canada. Thus, Taxpayer B has less opportunity than Taxpayer A, less than dual Canadian/US person, and less than people of Eritrean origin living in Canada.
Two questions, as I am not a lawyer:
(1) When a law or treaty contradicts the Human Rights Act, which one has precedence?
(2) Am I just missing something?
I don’t know where to put this but their is a new article up at the Financial Times website on FATCA.
I don’t know how accurate it is but a couple of key points I’ll make. One thing I think they are some big political issues with the accepting the idea of recipriciocity in an election year as the entire Florida and Texas congressional delegations both Republican and Democrat have come out against it(i.e. what we have called DATCA in the past). As much as Obama really wants FATCA I am not he has the political capital right now deal with the whole reporting of US Non Resident Accounts(DATCA) especialy with Florida whose banks have much of this business being such a swing state. It is also become apparent that much clearer policy is required on this issue from Ottawa, Brussels, Canberra, Brasilia etc as to where they truely stand on the US trying to tax their US resident citizens.
@Tim Your link takes you to a pay wall. I’ve linked it to google news instead.
@Tim Any specific thoughts on the question I ask in the post? I wonder why folks are not touching my questions.
“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”
– Frederic Bastiat
Perhaps I’ll try to answer my own question. The Canadian Charter of Rights and Freedoms says,
I would think that our Charter freedoms supercede any old tax treaty. N’est-ce pas?
One thing you to realize is the tax treaty savings clause included is very old. Even the current version of treaty dates back to 1980 where the Charter of Rights and Freedoms were put into place in 1982. There are a lot of laws on the books that violate the charter but only get challenged when the government actually attempts to enforce them. It is not clear whether the Canadian government has actually ever attempted to assist the US in collected unpaid tax on a dual US Canadian citizen or even just a US citizen permanent resident in Canada. Since last September the Department of Finance has been saying it won’t collect on Canadian citizens so it would “seem” to be mute issue. I guess the question is whether Canadian ratification of the US double tax treaty is constitutional from a Canadian perspective which is a question that leaves me stumped. The other thing I’ll add is the original drafting of these treaties with the US “Savings clause” was done in an era when there was no such thing as dual nationality. Even in 1979 it was a fairly new thing.
I also noticed in that interview I posted with Jason Kenney regarding Eritea dispora tax he made specific reference to Canadian “citizens” having no obligation to a foreign government. I wonder if they feel as a matter international law stronger in blocking foriegn taxation of dual Canadian citizens vs foreign citizens with permanent residence in Canada.
@ Tim: How could one find out if the CRA has ever collected on a US citizen resident in Canada? I have asked this question before at the Expat Forum and I have still never found an answer. I was hoping the following document would help (that’s why I had Russ Hunt dig it up for me), but it just says that the CRA will collect for the IRS, not the manner nor circumstances: http://www.tax-appeal-lawyers.ca/Demolition%20Ministerial%20Assumptions.pdf
The only country that I know has helped collect US taxes from a US citizen is France. This I learned from a US tax praticioner who lives and practices in Paris who was specifically aware of one situation.
However, be aware that if you apply to become a citizen of a a foreign country as a step towards renouncing you your US citizenshp, it is quite likely that the foreign country will check with your country of citizenship to confirm that you are not on the wanted list of criminals in your native country. I recall when I lived in Brazil that when the Brazilian Government checked with the US Government on a certain US citizen who had submitted an application to become a naturalized Brazilian citizen and discovered that this particular person was wanted in the state of Washington, his formerly home state, for bank fraud. So his application was denied by Brazil and he ended up being extradited by US government and sent back to the US where he stood trial. As I recall this person had lived in Brazil as a permanent foreign resident for several years before he actually applied for Brazilian citizenship.
@Roger Thanks for that information about France being the only one you have heard collect for the IRS. Sorry Victoria. 🙁
I am thankfully already a Canadian. You asked about my visit to inform the Toronto Consulate of my relinquishment. I told that story here: http://righteousinvestor.com/2011/04/07/my-april-7-visit-to-the-us-consulate/
So now I am a in between person: Not a United States person according to USC 1481 but not yet released from the tyranny of the IRS. See this post: http://isaacbrocksociety.com/2011/12/23/the-stalker-the-messy-divorce-process-from-the-united-states/
I just received a reply from the Canadian Human Rights Commission. I sent in a complaint based on what the banks will be doing, i.e. singling out those of us who are Canadian citizens but born in the USA, sending our info to the IRS and/or closing our accounts if we don’t comply to their questions about our dual citizenship.
Here is part of the response I received, quoted exactly from their letter:
“US citizens who do not meet the obligation to report the required information to the IRS will soon have to deal with the fact that details on their Canadian accounts will be provided to the IRS from another source–Canadian banking institutions are now putting systems in place to report all accounts held by US citizens =. This is a new requirement of FACTA that will come into effect in 2013 (extended to 2014 for Canadian financial institutions). In order for the Commission to accept a complaint, the alleged discrimination must have already taken place. As it appears that your are concerned about a discriminatory act that may occur in 2014, the Commission at this point will no longer consider your inquiry.”
“Furthermore, as mentioned above, the alleged discriminatory practice would not constitute discrimination under our Act because a dual filing obligation based on “dual citizenship” cannot be considered as a discriminatory act protected under the Act.” (end quote).
So it appears the CHRC won’t be able to help us. I will be renouncing as soon as I can come up with the $450 and the weather improves so I can make the drive to Toronto.
somerfugl: that response is terrifying! It is not the one I would have expected.
I was certain we had a strong case to make under Human Rights Code. How can our financial institutions be forced to gather and release information about us based on national origin? Why don’t we have the same rights as Canadian citizens or residents of Eriteria > origin? Is is because there is no tax treaty with Eritera?
Why has the Citizenship Minister said Canadian citizens have no obligation to a foreign government for one a different group may, in fact, have such an obligation?
The farther this goes, the worse it becomes!
“To force a man to pay for the violation of his own liberty is indeed an addition of insult to injury.”
– Benjamin Tucker
The comment from somerfugl deserves a distinct posting. The assumption that Mother Canada will bestow these human rights parallels the grasping hope that US legislation and/or IRS enforcement will approach sanity. Past direct experience with human rights stuff meshes with what somerfugl has just encountered.
Blaze, I was also surprised at the response from the CHRC. I expected they might say come back in 2014 after the banks have discriminated against us, but I was not expecting them to say , too bad, we can’t help you. Your question about us not having the same rights as other Canadians or Eritreans is a good one. Maybe someone with legal skills can put up a a more successful challenge based on human rights. In the meantime it makes me sure I have to renounce. We seem to have very little protection as long as we retain US citizenship. Flaherty has said that the CRA won’t collect on ridiculous FBAR penalties (for not filing in the past) if they are assessed by the IRS, but maybe in a year or two that will change. I’m not taking any chances.
My gut impression is the CHRC is basically saying this is above their pay grade and in some sense they’re right. I don’t believe though their “preliminary” opinion though is actually based on the facts in case(I don’t think they have actually studied FATCA all that much). I think more or less what they are saying is they won’t deal with it until 2014 assuming no other body of the Canadian goverment does anything to stop it before then.
@usx I agree, and I encourage you to write a post based on somerfugl’s comment if you feel it is important. Thanks.
@Tim Undoubtedly it is above their pay grade. But this is a problem. If the folks who are supposed to enforce human rights don’t understand human rights, then what do we get?
@petros, looking in from the ouside, it appears that although all citizens of Canada are all equal, some are less equal than others when it comes to Human Rights. Those who for whatever reason are deemed by the neighbor to the south to also hold dual citrizenship in that country, don’t have the same Human Rghts as other Canadians. It does not seem intentional that the Canada law should should make this so, but it appears that this is the bottom line.
“All animals are equal, but some animals are more equal than others.”
– George Orwell
Roger, sadly, I think you analysis is correct. Now, I’m not only feeling betrayed by my country of birth, but by my adopted country for the past 40 years, where I have been a loytal and patriotic citizen. If I had been born in Ertriea (sp?), I would have no obligation to a foreign government, according to our Minister of Citizenship.
Now I feel betrayed not only by my country of birth, but by my adopted country where I have been a patriotic, loyal and responsible citizen for 40 years. I always believed equality was a bedrock of Canada. Based on the Human Rights Commission’s response, I clearly was wrong as it applies to those of us of American origin or heritage.
As Petros has asked, does anyone know if we could be effective in a Charter Challenge? That of course, would be much more costly and time-consuming.
@blaze, I don’t know if you have the same kind of equal opportunity laws in Canada that we have here south of the border, but we are insured of the opportunity for equal opportunity in employment, not based on race, religion, ethentcity, national orign, or other discriminatory factors, and we are protected against compensation discrimination based on any of these factors. . Any violation of these anti-distrimination laws is illegal and subject to the full force of US law. It would be illegal in the US for a foreign citizen to be compensated more than anyone else with the same qualifications to be paid additional compensation to cover his costs for the additional taxes to which that foreign citizen would be subjected if he were taxed on his income while residing in the US by the government of his country of citizenship.
But our equal opportunity laws do not insure US citizens equal opportunithy in competing for jobs outside of the United States. In fact our tax laws are written to ensure that US citizens shall be denied equality of opportunity in seeking employment abroad, since, unlike citizens of every other country on the face of the earth we are uniquely subject to the tax laws of our own country in addition to the tax laws of the foreign country where we might like to compete for jobs on a level playing field. Although our unequal opportunity for employment abroad tax laws are applicable no matter where outside of the US in the world where we live, work or retire, our equal opportunity laws only apply if we stay within the territorial boundaries of the the US. And it is not just double taxation, is the the requirement that when living abroad that the US citizen spend untold additional thousands of dollars by contracting highly-qualified tax specialists in the establishment and maintenance of accounting records that citizens living and working in US are not requred to establish, and to prepare and submit extremely complex supplemental forms to both the US Treasury Department and the Internal Revenue Service that only those US citizens who live, work or retire are required to file. This is necessary because even inadvertent and inconsequential errors on these “residing abroad” forms make the US citizen subject to massive IRS fines and penalties.
For US citizens, eqality is suspended at the border.
But don’t give up the fight. As Martin Luther King proclaimed so eloquently, We Shall Overcome! It may not be during my lifetime, but God forbid that we ever forget this.
Thanks Roger. Yes, Canadian Human Rights Code and Canadian Charter of Rights and Freedoms enshrines all those rights in many areas of life. Those are among the many reasons why I’m proud to be Canadian–and why I am so stunned at response of Canadian Human Rights Commission to somerfugl. It seems national origin doesn’t apply to Canadians of American origin when we are dealing with our financial institutions. I
We won’t give up, but as we know from MLF’s experiences, it’s going to be a long battle–because IRS is not going to give up easily either.
For what it’s worth here is how I see this.
1. All domestic legislation is subject to international treaties. In other words, the treaty overrides the domestic legislation. Both the Canada Human Rights Act and the Ontario Human Rights Code (and other provincial human rights codes) are domestic legislation.
So, in analyzing the applicability of domestic legislation one presumably would:
First, see if the domestic legislation applied; and
Second, if it did see if it was overriden by the treaty.
2. Any treaty should be subject to the Charter of Rights because the Charter of Rights is part of the constitution of Canada. Bear in mind though that S. 1 of the Charter could be used to save an otherwise unconstitutional government act or law.
Now, where does this leave us.
Canada Human Rights Act – I don’t think that the Canada Human Rights Act would apply in any event. Although “national origin” is a prohibited ground of discrimination citizenship is not. But, I do acknowledge that (in general) Banks should be subject to this.
Ontario Human Rights Code – This is much broader and includes private companies like banks. Also, citizenship is a prohibited ground. So, I think that the Ontario Human Rights Code be used to create real problems for the banks. Also, it is easier and less expensive to use.
Charter of Rights: The issue here is S. 15 of the Charter of Rights – the Equality Rights Section. Now, although citizenship is explicitly stated as a ground of discrimination, the Supreme Court of Canada has ruled that “citizenship” is a prohibited ground. But remember that the Charter of Rights applies to governments and not banks. Okay, but where does that leave us? What has or will the government do? The answer I think is this:
S. 15 of the Charter of Rights could not be used against the banks – it can only be used against governments.
I don’t know whether the Government of Canada is obliged to protect citizens or Eritrea from the demands of their thug government. But, if they DO protect citizens of Eritrea from their thug government and they DO NOT protect U.S. citizens from their thug government, then it might violate S. 15 of the Charter. To put it another way:
I doubt the Government of Canada has a legal obligation to protect anyone from foreign governments. But, if the Government starts protecting its citizens from foreign thug governments, it cannot pick and choose among the various citizens its protects.
So, the next step would be to see if the Government of Canada has actually protected citizens of Eritrea from Eritrea.
If the Government of Canada were to negotiate a treaty that violated the Charter, it might have a problem. If a court determined that the treaty violated any of the provisions of the Charter, then the government would have to argue that it was saved by S. 1 of the Charter of Rights which reads:
1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
So, that is what I thing might be the deal. But, I am just thinking off the top of my head and have no idea if this is right.
@renounce Thanks for that thoughtful response.
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