Stephen Kish and Lynne Swanson have reviewed the legal opinion provided by constitutional lawyer Mr. Joseph Arvay on the constitutionality of the pending legislation “Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act”. This act is aimed at implementing the “Intergovernmental Agreement” (IGA) designed to make the “Foreign Account Tax Compliant Act” (FATCA) operative in Canada.
The opinion has also been discussed with Mr. John Richardson, a Toronto lawyer, with whom we now have solicitor-client privilege, and who will be part of Dr. Kish’s and Ms. Swanson’s “litigation committee”.
The lengthy opinion provides in detail the pros and cons of the arguments, and possible outcomes.
There are good arguments that the proposed legislation infringes at a minimum on constitutionally protected rights and freedoms. Nevertheless, there are also arguments that the Government of Canada may employ to counter our position and, we emphasize, there is no certainty that litigation will be successful. Further, any litigation will be hard fought and very expensive. This litigation is not for the faint of heart.
Given the opinion of Mr. Arvay and discussion with Mr. Richardson, we advise that it is our intention to take all necessary steps to commence litigation against the Government of Canada once the IGA implementation legislation is enacted. Moreover, the nature and impact of the unprecedented legislation on all persons in Canada and those throughout the world who will be impacted by FATCA demands that we exercise this option that is in the public interest.
Very significant fundraising will be required.
Stephen Kish
Lynne Swanson
@HenryHub
If you notice the comments section (expanded) we pretty much nailed Mr. Wood. Many of our comments were called out…(good thing) and Mr. Wood himself seemed, if not reformed, at least enlightened a bit. Let us see if his next article is more informative.
@ Charl
Mr. Wood never gets reformed. He might feign sympathy but he’s bound to put out another article expressing “amazement” at the next FATCA victory, while secretly doing fist pumps.
@Wilton Tidwell
I don’t think that your comment about race are either accurate or germane to this discussion. Particularly as this thread has to do with challenging the FATCA IGA in Canada based on the idea that in Canada, the Charter and Canadian constitution should rule – and that under the rights enshrined therein, discrimination based on national origin, and race, are not either desirable or lawful.
@Em
Well that is depressing.
I thought we “did good” over there. I just don’t get, never will, completely baffled by why we never seem to have legitimate debates on these articles. (Maybe because there isn’t one to be had?) Yes, you get Dear old Mr H’s pseudo intellectual mumbojumbo, but aside from him all the comments were against FATCA. Am I wrong that there hasn’t seemed to be much…”don’t let the door hit” you garbage lately? Just seems interesting TH was the only one commenting. I thought that we had so many “called-out” comments and he had NONE!..I was doing a happy dance! (Except when Mr Woods posed the thought that the US would get involved in our challenge I almost burst an aneurysm).
@ Charl
FATCA is butter on Mr. Wood’s bread but at least he let’s us comment. When T.H. gets surrounded and still fails to surrender it really doesn’t matter because all the right-headed comments are out there and will make a better impression than his. It’s still a plus for our side. So you did do good. Some people are just cement walls without any doors or windows that’s all.
Henry Hub
That is a misrepresentation. Not even half of those countries have signed an IGA, the rest are just giving it an ear but the US counts it anyway for propaganda purposes I guarantee this. Most of the countries that signed the IGA do not have the support of the citizens of those countries. We are on the verge of greatness in my opinion for we get to witness the complete and utter downfall of the USA and its isolation from the rest of the world.
As far as Russia is concerned, it’s kicked back to the banks now instead of the Russian tax service send info to the IRS. I wish this would happen in Canada so we can blame the banks themselves and sue them directly. The Russian banks are not going to report anybody in my opinion. There are 30,000 Americans actually living in Russia. Personally I’d take my chances living there because the Russian population despises the US government
Em wrote
Robert Wood wrote: “That will be interesting litigation to watch. Even if it is strictly Canadian litigation, I wonder if the U.S. will somehow try to become involved?”
All I could think of when I read that is that’s the whole problem — the U.S. got involved with our government, our legislation and our financial system. They had better butt out of our litigation.
Where do I send the money? I have been saving since early march …..
It might be prudent to also band together and vote for one candidate – or only candidates- who are willing to protect canadian citizens from foreign abuse. The chance of someone winning who is desirable and would protect the rights of all Canadian citizens would increase if everybody voted for the same person, and also might help when things go to court.
@Em, I thought the same thing, but could not be bothered to reply.
Great news. Please arrange for a way for those of us outside of Canada to contribute using non US based credit cards or debit cards.
crystal london,
Just keep following Isaac Brock – we will be told when and how to contribute.
@Em,
re; “Robert Wood wrote: “That will be interesting litigation to watch. Even if it is strictly Canadian litigation, I wonder if the U.S. will somehow try to become involved?””
I wondered the same thing. Will the US directly coach the Canadian government on this one, or provide resources to help Harper beat down and subvert the Canadian Charter and Canadian Constitution, and Canadian citizens and residents? Or will the US just seek standing by proxy – speaking through the mouth of the Canadian government?
The US was definitely already creating tactics and propaganda for FATCA IGA signatories to parrot (the same offensive phrasing kept popping up in both the US statements, and then later in the mouths of IGA signatories), so maybe Robert Stack and IRS Commissioner John Koskinen will be parachuted in to represent and defend the Canadian Finance Ministry, Canada Revenue Agency and Canada’s Department of Justice. Why have a Canadian federal government at all, or a Charter? Just send for US IRS and Treasury to speak for Canada – or write the script – and the Canadian government can use it as a voiceover.
Or, maybe Harper will just parachute in someone from the US Compliance Industrial complex, or Assistant Attorney General, Tax Division Kathryn Keneally – who previously (at Fulbright & Jaworski) represented the estate of dictator Ferdinand Marcos and defended it from taxes http://truth-out.org/news/item/8155-another-fox-guarding-the-henhouse-obamas-doj-tax-division-assistant-attorney-general-nominee http://isaacbrocksociety.ca/2013/02/01/jack-townsend-warnings-on-continued-government-patience-for-offshore-account-ostriches-13113/comment-page-2/#comment-1004192
Or maybe, they should listen to the conclusions of Scott D. Michel and H. David Rosenbloom (http://www.capdale.com/smichel) on FATCA;
‘Implications for the U.S. Abroad’ “The most significant reaction is the sense that
FATCA is another example of strong-armed American law enforcement imposing its will on other countries without their consent..
…”FATCA-required waivers present the real likelihood of a serious conflict between FATCA and the domestic laws of other countries, and it is unsurprising that many officials abroad view this provision as an improper interference by the United States in their legal affairs….”…..
“….it is becoming increasingly apparent that the backlash from FATCA, the burden on IRS
regulation writers, and the enormous cost of compliance are not worth the tax revenue that FATCA is likely to produce or to justify the other benefits of enhanced compliance. We urge Congress, working with Treasury and the IRS, to consider the repeal of FATCA’s core provisions and the consideration of alternative approaches aimed at solving a perennial tax enforcement problem without engendering a profound anti-American reaction overseas.”
from:
VIEWPOINTS
TAX NOTES INTERNATIONAL MAY 30, 2011 • 713
“http://www.capdale.com/files/4178_FATCA%20Article.pdf
‘FATCA and Foreign Bank Accounts: Has the U.S.
Overreached?’
When MP Weston said that he invited another US tax lawyer (Mark Mathewsw who “served as IRS Deputy Commissioner from October 2003 through December 2006, overseeing a period of unprecedented growth in enforcement activity…” http://www.capdale.com/mmatthews ) from Caplin and Drysdale http://isaacbrocksociety.ca/2014/03/06/a-letter-from-john-weston-regarding-the-iga-we-need-to-educate-the-mps/comment-page-1/ to speak to the Conservative Caucus on FATCA they must have been very selective about which opinion from a Caplin and Drysdale lawyer they chose to listen to. I doubt that MP Weston or the Conservative caucus paid any attention to Scott D. Michel or Rosenbloom of the same firm, condemning FATCA in no uncertain terms, as they have in the article above. Even Mathews said; ..”..Bilateral agreements to implement FATCA are “a workaround,” said Mark Matthews, a lawyer at Caplin & Drysdale and former head of the criminal investigation division at the Internal Revenue Service. “It is clearly less airtight and bulletproof. But the (FATCA) statute as written was wholly unachievable,” he said…”.. http://www.capdale.com/mark-matthews-quoted-in-reuters-overseas-tax-dragnet-refocuses-on-country-partnerships
@Badger
I feel entirely confident that the more people on both sides of the border learn about FATCA and CBT, the more they’ll express their disdain for it. The best thing that both have had going for them, is that no one knows about either. My life would be very different today, had I known about CBT when the US should have made me aware of it years ago…
I think FATCA will be lucrative for the USA- and not just because of expats. They are way more than 7 million people involved when we count the spouses and the boarder babies and the people with an ameircna grandmother. Add corporations tot he list which have american ties and you get a LOT more than taxes from 7 million expats. There are bigger plans for FATCA once implemented. Man- I honestly don’t think one should underestimate what is going on here.
May be true, Polly, but it will be a one time fleecing.
http://samuelclemmons.wordpress.com/2014/04/03/fatca-enforcing-the-unlaw-of-the-land/
You guys should have called me first. My rates are a lot lower.
@ ChearsBigEars I agree wouldn’t mind taking the chance living in Russia They stand by themselves and despise US. It is not like the puppet marionette Harper. It is true we all repeal FATCA and the US taxation based on citizenship/. It is the US isolation.
Just show me ONE even just ONE government representative that can answer the questions put forth by “Canadian cop” in his list of questions. There is NOBODY in the Canadian government who has either answered them honestly or even tried. We are being screwed over here and we just sit here and take it…..
The Harper government, speaking through Minister Kenney has said:
“At the federal level, we believe our job is to make all people who live in this country — regardless of their religious, ethnic, cultural background — feel welcome, feel part of our country, feel like this is a land of equality of opportunity,” said Kenney.
“We are very concerned by any proposal that would limit the ability of Canadians to participate in our society and that would affect the practice of their faith,” he added.
“And we are very concerned by any proposal that would discriminate unfairly against people based on their religion, based on their deepest convictions.”
Kenney said the federal government will instruct lawyers in the justice department to “closely review” the provisions of the bill if it ever becomes law.
http://news.nationalpost.com/2013/09/10/harper-government-warns-of-possible-legal-challenge-to-quebecs-proposed-values-charter/
He was speaking about the ‘values charter’ that was proposed by Quebec. I do not bring this up to divert this thread into an argument about the ‘values charter’ or freedom of religion. My point is that the Harper government would like to pick and choose which Charter and Constitutional rights they will respect and vigorously defend and which they reserve the right to suspend or abrogate – without public scrutiny or Parliamentary debate.
I ask you to re-read Kenney’s statements, and consider why it is that a Harper government minister is willing to say ““At the federal level, we believe our job is to make all people who live in this country — regardless of their religious, ethnic, cultural background — feel welcome, feel part of our country, feel like this is a land of equality of opportunity,””, and threaten to take Quebec to court, yet his colleagues at the Finance Ministry signed away the Charter/Constitutional rights of Canadian citizen and resident families and individuals under the FATCA IGA – giving in to the extraterritorial demands of a foreign government – the US, who asserts the right (well outside the boundaries of its national jurisdiction) to demand and control our personal and financial information regarding our legal local savings and assets – and the right to tax them from afar, and impose an extortionate 30% ‘withholding’/economic sanction on Canadian financial (and NON-financial) institutions as an ‘incentive’?
And they hid it inside a huge Omnibus bill. They refuse to even confirm or deny that they spoke with the DOJ about the FATCA IGA, citing client privilege (though one Conservative MP has stated that they have confidence that the IGA will pass judicial scrutiny – and implies that they have had such an opinion).
Why is Kenney willing to defend against discrimination based on religious beliefs, and bring to bear the full legal powers of the federal government against Quebec, but the Harper government is not interested in defending fellow Canadian citizens and residents against discrimination based on national origin, birthplace or parentage – which is one of THE primary methods that US extraterritorial CBT and FATCA use to identify ‘US taxable persons’? Our national origin, birthplace and parentage are immutable characteristics. We can never change or control them – even if we obtain a CLN.
Why is it okay to refer to us as ‘US persons’ or Americans in Canada in the context of US claims, and not to extend to us the same “welcome” and equal inclusion? Many of those affected were actually either born in Canada, or born of Canadian parents. Others became Canadian citizens and swore allegiance to Canada many decades ago. Others more recently. Yet, the Harper government is happy to pretend that we are merely ‘US persons in Canada’.
Either Canadian citizenship means something inside Canada’s sovereign borders or it does not. The federal government cannot decide that it is not convenient to acknowledge its legal and fiduciary duty of care to ALL Canadian citizens and residents when up against the power of the US (vs. a province).
Contrast Kenny’s comments with the Harper government’s willing violation of our Charter and Constitutional rights under the Made-in-the-US FATCA IGA. This is in combination with his government’s singular and egregious failure since their tenure began in February 2006, to plug the already glaring holes in the Canada US tax treaty which allows for the US taxation of our registered savings and the penalization and burdensome reporting of them as ‘taxable foreign trusts’. The purpose of the treaty is to protect the citizens and residents of Canada. We cannot compel the US to respect Canadian laws, but we can refuse to enact or enable them on Canadian soil.
All those who the FATCA IGA defines in the broad category of ‘US persons’ are actively being denied equality of opportunity, and equality of participation in Canadian society. They cannot equally:
– benefit from the financial incentives and opportunities that the federal government subsidizes or funds from the collective taxes paid by ALL of us – via grants or exemptions or deferrals. This includes TFSAs, RESPs, RDSPs, PRPPs, (and RRSPs and RRIFs – unless onerous US paperwork – ex. Form 8891 is filed every year over a lifetime).
– Canadian children with a US status parent or a US birthplace cannot benefit from RESPs – though their parents will be paying the Canadian taxes that make the RESP grant and tax deferral possible. They are deprived of the opportunity to enjoy the social ‘good’ of affordable access to post-secondary education that our federal government has made available as an important social policy tool.
Canadian children and dependents with disabilities who are claimed by the US as ‘taxable persons’ cannot benefit from Canadian disability grants and the RDSP and so are deprived of this opportunity for security that others in Canada without the US taint can enjoy.
– Canadian families who contain anyone with deemed ‘US person’ status as owner of their primary residence are subject to US capital gains tax on the sale of the family home. This constitutes an extraterritorial foreign tax on what usually functions as the family nest egg.
The FATCA IGA functions in furtherance of US efforts to seek out and enforce US extraterritorial tax laws around the globe http://opinion.financialpost.com/2014/02/11/canadas-u-s-tax-capitulation/ . It is specious and disingenuous for the Harper government to claim that FATCA doesn’t impose any ‘new taxes’. It does impose a 30% withholding penalty for failure to cooperate as demanded. The already pre-existing confiscatory ‘non-willful’ penalty structures that accompany the FBAR, ‘foreign trust’ reporting, the recently created FATCA form 8938 for individuals, and the new Obamacare investment tax are new methods of US revenue generation that are not addressed by the ‘reciprocal’ tax treaty. Suspension of statute of limitations and confiscatory penalties created by some of these also pose additional cumulative layers of threat. We know that FATCA is part of a much larger plan to maximize US revenue and that the IGA is only the tip of the iceberg.
Representatives of the Harper government repeatedly state that they ‘respect’ the ‘right’ of the US government to make its own tax laws – even if they claim the legal local assets of Canadians, but they have never said that they ‘respect’ any of our Charter and Constitutional rights as Canadians, and our rights to be protected within Canadian sovereign borders from the extraterritorial threats and incursions of a foreign government.
I want to know:
Mister Harper, do you ‘respect’ the rights of those your government is sworn to protect and defend?
If you force us to mount this Charter challenge in order to pursue what is just and ethical, you are defending the elevation of a foreign law and the interests of a foreign nation above the laws of Canada and the rights of Canadian citizens and residents.
Consider that if you use Canadian taxpayer money to do so, you are diverting funds which were collected and intended to be used for the betterment of Canadian society in order to act as a de facto direct arm of the US Treasury, with no benefit to Canadians, in concert with the demands made by a foreign government – who is imposing them unilaterally and extraterritorially, by extortion, via threats of significant economic sanctions.
@Badger,
Your comment was amazing as usual. I hope you email or mail some of them to people who might be able to act on them.
It is sickening and outrageous that we must raise substantial funds in order to force our own federal government to live up to its duty to Canadians, and that it will defend a US law over the laws of Canada.
I hope that everyone who read here at IBS, and over at Maple Sandbox channels their anger and outrage into fundraising to make this legal challenge a success.
It is the US law FATCA today, but what US or other foreign extraterritorial law will it be tomorrow?
@WhiteKat,
I have sent some of these things or parts of them (in different tailored versions) via email to MPs before. My local MP is a Conservative who doesn’t care – even about the RDSP and RESP issue. You’re right, I should keep trying – if only to make their complacency a bit less comfortable.
How can we shame those who have no shame?
Very well said Badger. I think that you should be on the litigation team!
@badger – the flaw in Mr. Harper’s position is in accepting the premise that the US has any “right” to make laws of extraterritorial effect. Taxing property or income derived wholly in Canada is in no way a “right” of the US. The premise of the sovereign right of the US is entirely wrong as a matter of international law and as a matter of domestic (Canadian) law. The US may have the “right” to seize expat property in the US to enforce its claims, but not to enforce those claims in Canada unless Canada passes a NEW law to CREATE that right in Canada. It is not an exercise of US sovereignty in that case, but Canada’s. Of course one would have thought that neither Canada nor any state with their head screwed on would voluntarily do that. But then again, I think i see a flock of flying pigs outside my window….