Please go to these articles about the lawsuit and comment:
cross posted from the ADCSovereignty WordPress blog
I left my root canal appointment this afternoon to a message announcing that Justice Martineau had rendered his decision. We did not win round 1. Notice that I did NOT say that the Government won round 1.
Here is the decision:
T-1736-14 decision sept-16-2015
Before, I comment specifically on the decision, I want to be clear on the following points:
- This decision marks the end of the beginning. It has always been clear that this litigation would NOT stop at the first level of trial.
- The “summary trial” on the Tax Treaty issues was a “carve out” of the main Charter issues.
- Obviously we continue on.
I am not surprised by the result – that is a “win” or a “loss”. What I am surprised at is the content of the decision (which I will get to in a moment).
But first some general thoughts/feelings/comments …
A. As you know, the CRA has announced that it will be sending the results of “FATCA Hunt” to the IRS on September 23, 2015.
This is hardly a surprise, given that Canada, has been and continues (under the Harper Government) to be a “World Leader” in FATCA implementation. Obviously this is a great disappointment. My guess is that it will be a long time before there are any specific results (meaning letters from the IRS) from this.
This is the beginning of a long struggle. Remember, this is a “marathon” and NOT a sprint. Concern is appropriate. Panic is not. Justice Martineau’s decision does reinforce the principle that the Treaty does NOT obligate the Canada Revenue Agency to assist the IRS in collecting tax on Canadian citizens. Do NOT do anything that is reckless and is a reaction to this decision (as opposed to a response). You will be subject to a good deal of “fear mongering” from various people (accountants, lawyers, bankers …). You should deal with this situation “one FATCA letter at a time”. Remember that a “FATCA Letter” is a letter that indicates that you are under “suspicion of being a U.S citizen”. It does not mean that you are a U.S. citizen.
The only difference between today and yesterday is that Justice Martineau has ruled against us – clearing the way for the next step.
In any case, Justice Martineau has “cleared the way” for the CRA to send your account information to the IRS. This is not good news.
B. It’s important to see this decision as an event that brings us one step closer to moving this issue through the courts.
For those of you who see the result as failure (and I don’t) I remind you that every failure brings us one step closer to our next success.
“Ladies and gentlemen, we go back to work and keep moving forward.”
I believe that it will end at the Supreme Court of Canada. The jurisdiction of the Supreme Court of Canada is “public importance”.
Interestingly Justice Martineau did NOT make a “costs award” against Gwen and Ginny. He wrote (p 44):
“There shall be no costs. This is a case where, in view of the nature of the issues and the public interest involved in clarifying the scope of novel provisions affecting hundreds of thousands of Canadian citizens, no costs should be awarded against the losing parties.”
It strikes me that this is a recognition of the “public importance” of the issues involved, confirming that this is a case that should eventually be heard by the Supreme Court of Canada.
C. Thoughts on Justice Martineau’s decision …
Full disclosure – I read the decision very very quickly. It is 46 pages. I will read it again later, much later. There doesn’t seem to much substance to the decision. A huge part of the decision simply recites the terms of the IGA and the implementing legislation.
Basically, what Justice Martineau says is:
– the IGA was of great benefit to the banks and was supported by the banks (p 21)
– “Congress has spoken” (have you heard that before): Meaning this is a political decision in the United States
– The Government of Canada has the right to make and interpret tax treaties that involve “information exchange”. In this context, it is NOT for the Government of Canada to question the relevance of the information to the enforcement of U.S. tax laws in Canada. Treaties are about giving the treaty partner country information that they want (p 43)
– Whether the IGA is a Treaty or not is irrelevant (from a Canadian perspective) . Either way it is consistent with and within the purview of what is allowed by the Canada U.S. Tax Treaty (p 29)
– If you are a dual citizen, too bad. That’s simply the price of U.S. citizenship or dual citizenship (he doesn’t seem to get that citizenship is being forcibly imposed on people who believe that they relinquished U.S. citizenship years ago)(p 44)
– Justice Martineau adopts the distinction between the “assessment of taxes and penalties” and the “disclosure of information”. In other words, he rejects the submission that the Government of Canada is assisting the U.S. to collect tax on Canadian citizens. (p 42)
I would imagine that many, many expats will disagree with this last point, as Dash said:
I think Justice Martineau’s ruling boils down to the following:
“Accordingly, in the absence of concrete evidence, it is speculative to suggest that the automatic collection and disclosure of taxpayer information mentioned in the IGA is tantamount to providing help to the US authorities in the collection of taxes.”
This is where I strongly disagree with Justice Martineau. Collecting information about someone’s assets (not just income) can serve no purpose other than to assist in collecting taxes.
What this means …
In the world of FATCA, IGAs, and tax treaties the rights of individuals (if they have any) are subordinated to the broader purposes of the information exchange. Justice Martinueau says: “Just renounce” (have you heard that before)? -(p 27)
On the one hand Justice Martineau’s decision may be consistent with the interpretation of the Tax Treaty.
On the other hand Justice Martineau’s decision makes it clear that individual rights are irrelevant to Tax Treaty interpretation.
The Charter of Rights, on the other hand, is about the recognition and protection of individual rights. It strikes me that the lack of concern for individual rights in Justice Martineau’s decision (whether correct as a matter of law or not) may strengthen the validity of the Charter of Rights claims.
In closing …
This post is a quick message to supporters. I want to emphasize how much we at the Alliance For The Defence of Canadian Sovereignty value your support and thank you for it! I repeat we thank you. This lawsuit has been and continues to be about you.
I will reread the decision and update this post later this evening or early tomorrow.
P.S. Canada is the country most affected by FATCA and the country with the “moral authority” to resist FATCA. The Harper Government could have chosen to be the “FATCA Terminator”. Instead it decided to establish itself as a “World Leader In FATCA Implementation”. This is further evidence of the Government of Canada behaving as “managers” instead of as “leaders”.
On October 19, 2015 you might remind Prime Minister Harper how you feel about his surrendering Canada’s sovereignty to the IRS.
Martineau has either been paid off or threatened by either our government or the USA. You can count on that!
Funny that the timing of the USA’s decision to charge the 2350US to also relinquish was so close to Martineau’s decision. They are all in bed together.
I was hoping for Santa Claus
That the nightmare would end with this trial
Had we won the govt would have appealled
Its going to the. Supreme court az a charter case
My heavy heart says thanks for this, John Richardson (and Tricia for cross-posting).
We continue our marathon…
“Martineau has either been paid off or threatened by either our government or the USA.”
I think threatened.
Think of the judge who read the verdict in the second case against Mikhail Khodorkovsky. When Putin convicted Khodorkovsky of two mutually contradictory charges, the second judge obviously didn’t like reading what he had to read. If he’d been paid off he would have been happy to read that verdict. He read it because he was threatened.
Maybe the US paid Harper to persuade Harper to threaten the judge. The US will have lots of money available to make payments. CRA will give the IRS information to use for the IRS to collect penalties not taxes, since the amount of tax in most cases is $0.00.
My thought are with Gwen and Ginny right now. What doesn’t kill you makes you stronger.
Gwen and Ginny are two mighty strong women who stood up for all of us. On to the next steps in this marathon, knowing all along that is what we bought in for.
Thanks to Gwen and Ginny and everyone here — stay strong.
From what I have read of Justice Martineau’s lengthy statement, it does not appear that Gwen and Ginny are held liable for any charges. Thank God for that.
We received some news coverage from this which is good as well. It seems to be hard to come by these days.
The media will be over this like flys on shit, the Conservatives will make sure of that. they will make this front page news and tell everyone that they are Americans in Canada and pay the USA and shut up. We need lots of money to pursue this and the government knows we struggled to make it this far. They have endless money from sheep Canadians to spend, we do not.
Assuming Harper gets kicked out, I’m certain that virtually nothing of substance will change, whatever was promised will be forgotten as per usual practice, although no party except the Greens are actually making any promises concerning FATCA. No matter who wins the election, the abuses from CBT won’t end, we’ll have no choice but to continue resisting and making as much noise as possible. It sure doesn’t help that many of us in the know are very frightened and wish to remain below the radar, and many many more people who are affected are completely in the dark, they have no idea what’s secretly being plotted against them, and they likely won’t know until threatening letters start showing up, or much worse when they unwittingly make a day trip across the border.
This is going to be a very long and bitter fight. I expect that even if we eventually get a favorable supreme court ruling, CBT will continue to find new insidious ways to carry out its abuses, it just won’t end until CBT is finally abolished.
Think of it in this way: CBT is a form of slavery, there’s just no other word that defines it better. The US government will only have a reason to abolish the slavery once the cost associated with enforcing it becomes greater than what they get back in return. You can forget about appealing to morals and justice, there is no such thing in any government. We’ll just have to make practicing slavery a very costly endeavor for anyone who is supporting it. Whatever we do, we must never cooperate, we must resist in as many ways as possible – multiply individual small acts of resistance by 1 million, and the whole thing grinds to a halt.
As I re-read the FP article, the last sentence, I hope, will strike consciences of those not directly involved: “Neither have lived in the U.S. since arriving in Canada as children, and neither has held a U.S. passport.”
It is disgusting that countries such as Canada would give out data in such circumstances.
Would the US have really carried out its threat of 30% withholding if nobody in the world had signed an IGA?
Would such accidental US persons lose if pursued in Canada by the IRS? Would the courts bow to the US again?
I just cannot accept Justice Martineau’s finding though I confess I am in shock and have as yet merely read the excerpts. It is going to take me some time to absorb this.
In Jamaica the expression is “What doesn’t kill, fattens; and what doesn’t fatten, kills”.
I hope that in this case …. what doesn’t fatten (give Justice) will not kill us all with injustice.
I’ve only had time to quickly scan Justice Martineau’s decision.
Expect that the Arvay team will provide a commentary and strategy.
Suggest there be an aggressive, public and timely statement from the Arvay team to the media about taking this to appeal.
Key to this: what is the status of ADCS war-chest?
Was $500K a blanket fee to go all the way to SCC?
There are silver linings to this cloud:
– It paves the way for an appeal to the Supreme Court of Canada (SCC). Justice Martineau’s final comments are practically an invitation to proceed based upon the broader Charter issues.
Getting leave to appeal should be easy; Martineau has practically ensured this by the reservations included in the final sections of the decisions.
– Also, there is no bar to appealing the narrow but substantive technicalities of the Martineau decision.
– By its very nature as Canada’s highest court, most of the cases heard at SCC are appeals of cases where a lower court ruled.
– This case has shined a light on the issue and generated more publicity.
– I have always held that many of the Canadians affected by FATCA – and the US imposition of taxes upon anyone in world born in the US regardless of where they actually live and work – are ignorant of its true consequence. This may be a wake-up call
– As the FATCA machine gears up to impose threats and penalties on so-called “US persons in Canada” who have the temerity to hold local financial accounts, there will be more awareness, fear and concern … and likely defiance and blowback as well.
– The FATCA machine will automate foreign-based threats against a entire class of Canadians, and in many cases these will be threats that it in reality have no actual mechanism of enforcement. This will create dissent, anger and contempt.
– The definition of a so called “US person in Canada” is a foreign state’s law, and is in direct conflict with s.15 of our Charter – the Constitutional law of Canada. At the heart of this case is the conflict between a remote foreign law and proximate Canadian Constitutional law.
– See “Andrews v Law Society of British Columbia”
In that case, the SCC focused on the prohibition of discrimination …
Thank you for this John. The marathon continues.
I thought there would be at least something in this decision, like a requirement for Canadian FI’s to inform customers that their info is about to be transferred. I know that his decision was NOT based on Charter issue, but on a very narrow interpretation of the Treaty and Income tax act. That said, i am very very disappointed. The only good news is that this decision is done and we get to move toward a trial on the Charter issues.
I realise this is not exactly on topic, but it’s unusual for jobs to go from the US to Europe. GE is transferring about 1000 jobs to Europe because of the US Congress’ refusal to continue operating the Import Export Bank.
An example of the US Congress’ decision not to listen.
How many jobs is the US losing because of investment decisions negatively impacted by FATCA?
“Would the US have really carried out its threat of 30% withholding if nobody in the world had signed an IGA?”
Yes, for two reasons:
(1) If the US withholds the money and keeps it, even banks will have trouble getting US courts to order refunds.
(2) If embezzlers in the IRS (as Monica Hernandez was not likely working alone) take the money, they win. The Treasury Inspector General for Tax Administration reported that funds stolen from victims’ Forms 1099 included withholding from interest and dividends, but TIGTA conveniently omitted mention of withholding from gross sales proceeds (not capital gains) from sales of shares. When banks sell bonds, embezzlers get to steal 30% of gross sales proceeds from sales of bonds. Who would ever forgo such easy pickings?
WSJ: Canada Court Dismisses Tax Suit Against Government U.S. expats had sued Canadian government for role in implementing a U.S. law designed to clamp down on tax evasion
Sounds to me like the author thinks this is a Canadian done-deal:
Shockingly poor journalism on the part of the WSJ. But again–as I mentioned in my comments to @bubblebustin moments ago–don’t be dependent on what people south of the border do. That includes the WSJ.
The WSJ probably doesn’t know the difference between Federal Court and the Supreme Court in Canada. They should because the U.S. has a similar structure encompassing about 100 regional Federal courts plus Federal appeal courts and the Supreme Court.
@Duke of Devon
The WSJ knows the difference. They are being wilfully disrespectful not charmingly innocent.
But when it comes to being respectful the loyal donors to ADSC-ADCS are–if a new funding goal by Sept 21 truly is needed–owed a response imminently. Given the extremely short time frames it isn’t right to make people wait more than a few hours.
@Calgary, that article is disgusting. Can we get a complaint to the WSJ editors and demand a retraction?
The plaintiffs are NOT expat Americans they are Canadian Citizens!!!!!
This was a summary trial, we are simply waiting for the full trial!!!!
In a free and democratic society we should get several talented writers to post op-eds about the offensive article, but leave the offensive article in place.
The WSJ knew what they were doing. Homelanders lump the 99% in with the 1%. We need to show readers what the WSJ and homelanders are doing.
I have done so, George. According to a search on the internet, this piss-poor article has been picked up by many other publications, including at http://haydonperryman.com/2015/09/17/canada-court-dismisses-tax-suit-against-government-wsj/.