[PRIVATE BANKING DATA ON 155,000 CANADIAN ACCOUNTS WERE (PRESUMABLY) TURNED OVER ON SEPTEMBER 30 BY YOUR OWN CANADIAN GOVERNMENT TO THE UNITED STATES.
Plaintiffs Ginny and Gwen, ADCS, and our legal team are now planning the next steps for round two of our fight.
Professor Allison Christians, an expert witness in our Canadian lawsuit, comments:
“In my view it was political malfunction in both the US and Canada that brought forth FATCA and then the FATCA IGA, and that FATCA as applied can be summed up in terms of administration as a case of continuous indifference to individuals who are wrongdoers in no real sense yet bear the brunt of severe punishments meant for others. If the judiciary is also not to blame and not to fix, then it seems there is no avenue to right the wrongs of FATCA anywhere. I hope that is not the case.”]
Cross posted at ADCSovereignty
Here is the actual Order for denying the injunction:
Here are the reasons provided by the Court for denying the injunction request:
RENNIE J.A.
[1] On September 15, 2015 the Federal Court dismissed, in part, the appellants’ action for declaratory and injunctive relief with respect to intention of the Minister to disclose certain financial information to the Internal Revenue Service of the United States of America. The summary trial decision of Justice Martineau addressed only that part of the action dealing with what might be characterized as the statutory interpretation and statutory authority of the Minister to make the disclosure. Charter challenges to the proposed action were, on consent, not addressed and await trial. Thus, the summary judgment dealt exclusively with the allegation that the disclosure was contrary to the Canada–United States Tax Convention Act, 1984 (S.C. 1984, c. 20), the Canada-US Tax Treaty and Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), collectively described as the authorizing legislation.
[2] The appellants move on an urgent basis for an interlocutory injunction, effectively staying the disclosure of their financial information by the Canada Revenue Agency (CRA) to the Internal Revenue Service (IRS) under the authority of this legislation. The Minister has made clear that she intends to disclose this information at the close of business today, hours from now.
[3] By way of background, and at the highest level of generality, the legislation mandates the disclosure of information about “US persons” held by Canadian banks to the CRA, and provides for the CRA to automatically disclose that information to the IRS on an annual basis. The IRS may or may not use that information to pursue enforcement actions against US persons resident in Canada.
[4] The appellants are “US persons” by virtue of birth, but have spent their working lives in Canada and are Canadian citizens. They do not hold US passports. They claim to be “accidental Americans”, US citizens only by reason of birth. Their information would be disclosed under the regime, which could lead to the IRS enforcement action. The judgment below is candid that the application of the law could cause the appellants serious difficulties.
[5] The appellants argue, amongst several other grounds, that the disclosure of this information constitutes assistance to the United States in its enforcement and collection of its taxes, which is prohibited under Article XXVI A of the Canada-US Tax Treaty. The Federal Court found that this prohibition only applies once tax liability has been determined and is enforceable, and is thus not triggered, and that in any event, any such claim was premature.
[6] The appellants further argued that information sharing was only permissible when that information “may be relevant” to enforcing the treaty or domestic laws of a contracting state (Article XXVII), and as such the information must be assessed for relevance on a case-by-case basis rather than handed over in bulk. The judge below found that, even when the information is still in bulk form and has not been shown to have any further utility, it already meets the “may be relevant” test. The appellants argue, in support of the interlocutory injunction, that the learned judge’s reasons fail to respond to this argument; the judge erred in focussing on the fact that Canada cannot challenge US tax policy choices, but failed to explain how that establishes or meets the statutory requirement of relevance.
[7] The appellants also argue that the regime violates the non-discrimination provision of Article XXV, wherein a US National resident in Canada cannot be subject to a burden that is not also imposed on Canadians in Canada. The appellants argue that the privacy intrusion, and the burden of complying with the filing requirements, are thus unequally imposed on them as US Nationals resident in Canada. The judge rejected this argument. While he did not directly address the privacy interest, he said that the filing costs are borne by the banks rather than the individuals and thus cannot ground unequal treatment.
I. The test for an interlocutory injunction
[8] I am not satisfied that each of the three criteria governing the grant of an injunction or stay pending appeal set forth in RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, 1994 have been met.
[9] The appellants assert four serious questions to be addressed on appeal. At this stage the Court only needs to examine the questions and be satisfied that they “may” form the foundation of a meritorious appeal. In addition to the grounds reviewed above, the appellants argue that the automatic disclosure of taxpayer information of Canadian residents who are also US citizens, is not authorized by the Canada –US Tax Treaty. While Martineau J rejected this argument, and the subsidiary arguments which underlie it, the question at this stage is only whether the appellants might have a credible case to make an appeal. I am satisfied that they do.
[10] I am not, however, satisfied that the criteria of irreparable harm has been met. The Minister concedes, on two occasions in her memoranda, that “there is no taxpayer information concerning the Appellants in the batch of ‘slips’ that have been collected by the Minister from financial institutions pursuant to Par XVIII of the Income Tax Act and which the Minister must disclose to the United States, pursuant to the IGA, on or before September 30, 2015.”
[11] On this understanding, the appellants do not meet the second criteria of the RJR — MacDonald test. As no financial information concerning the appellants will be sent to the IRS, there can be no irreparable harm.
[12] Turning the third criteria, the balance of convenience, the Minister concedes that the appeal will not be moot as of this transfer of information this afternoon. The Minister concedes the existence of a continuing live controversy. While mootness is always an question for the panel of this Court hearing the appeal, at this stage, the Minister’s position that the appeal will not be moot tips the balance of convenience in favour of the Minister.
“Donald J. Rennie”
J.A.
@NormanDiamond:
“I still can’t imagine Russia joining OECD”
From OECD.org Taxation:
“The OECD and the G20 have a mutually beneficial relationship in the area of taxation. While the G20 has incentivised changes in OECD standards and initiatives, the OECD has in turn helped push forward cutting-edge issues on the G20 tax agenda.
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
The work of the Global Forum on Transparency and Exchange of Information for Tax, hosted and supported by the OECD, has been critical in achieving the remarkable progress registered in the realm of international tax transparency and exchange of information. The Global Forum was restructured in September 2009 in response to a G20 request to strengthen the implementation of these standards and to launch an ambitious peer-review process of national legislation in the realm of tax transparency.”
The Global Forum now has 120 members. It has completed the reviews of jurisdictions laws’ and their compliance with the international standard, for the vast majority of its member jurisdictions and its focus is now moving to the review of practice, where reviews have been completed for 50 Global Forum members.
@NormanDiamond:
The OECD and the G20 have a mutually beneficial relationship in the area of taxation. While the G20 has incentivised changes in OECD standards and initiatives, the OECD has in turn helped push forward cutting-edge issues on the G20 tax agenda.
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
The work of the Global Forum on Transparency and Exchange of Information for Tax, hosted and supported by the OECD, has been critical in achieving the remarkable progress registered in the realm of international tax transparency and exchange of information. The Global Forum was restructured in September 2009 in response to a G20 request to strengthen the implementation of these standards and to launch an ambitious peer-review process of national legislation in the realm of tax transparency.
The Global Forum now has 120 members. It has completed the reviews of jurisdictions laws’ and their compliance with the international standard, for the vast majority of its member jurisdictions and its focus is now moving to the review of practice, where reviews have been completed for 50 Global Forum members.
The Multilateral Convention on Mutual Administrative Assistance in Tax Matters, jointly developed by the OECD and Council of Europe, provides a good multilateral platform for widespread adoption and use of automatic exchange of information. The Convention was updated and opened to all countries at the requst of the G20, and the amended Convention provides for all possible forms of administrative co-operation between states. The Convention contains strict rules on confidentiality and proper use, and permits automatic exchange of information.
All G20 countries have signed or committed to sign the amended Convention and have consistently encouraged all countries to join.