— Still expecting that the Constitutional-Charter trial will take place in 2017. Date however, still uncertain and will depend on how Motions are decided by the Court.
— The Government lawyers have now asked the Court, by way of a formal motion, to compel the Plaintiffs to provide certain additional documents and our lawyers will be resisting the motion.
One of our Plaintiffs, Ginny, comments on the Motion to compel more documents from Plaintiffs: “They are asking for more answers from the plaintiffs which we and our lawyers deem unnecessary and pedantic, let alone not legally relevant. For instance, here’s a little example. They really want to know my credits and debits from my chequing account? Sure, I could tell them the whole unabashed truth under oath… The debits are the usual household monthly expenses of the average family with one exception. Barclay,the greatest dog on earth eats a lot and is rather spoiled and gets more haircuts per year than I do. In the last few days of the month, we hold our breath and hope we make it to the end without going into overdraft. And so my question to them is: how is this relevant to your [Charter] section 1 argument?…Why can they not tell us whose banking account information has been turned over to the IRS via the CRA, whether over or under the >50K aggregate [see Plaintiffs’ questions and Government “responses” below in link]. We’d like that on the record, whereas I can bet the farm that the average Canadian does not care what Barclay’s food costs are.”
— See the (amended) Claims of the Plaintiffs and the now published as affidavit last response of Government to the Claims.
Note the changes (underlined) from original response on page 137 (14) in which Government denies Constitutional violations and now argues that “To determine whether any Charter rights or constitutional principles, written or unwritten, have been infringed unjustifiably by such alleged enforcement requires a factual matrix where the US has actually attempted to recover, in Canada, taxes or charges against a particular individual residing in Canada.”
Note also that Government has now DELETED on page 139 (16) its previous statement: “Furthermore, the defendants deny that there exists a principle of fundamental justice that foreign tax debts are not enforceable in Canada.”
— See the many questions asked by Plaintiffs to Government detailing the type etc. of FATCA information provided by Canada to United States and by U.S. to Canada, response of Government, and Objections raised by Government to Plaintiffs’ question.
I was particularly interested in knowing details on the bank account information that flowed from Canadian accounts in U.S. to Canada as part of the so-called “reciprocal” FATCA agreement — a key justification, in addition to promise of economic sanction for non-compliance, for Canada to “agree” to the FATCA IGA.
Government response to the request for information on the reciprocal bank data are: “On the advice of counsel. I am unable to answer” with the attached objection: “The Defendants object to Q. #4 and refuse to answer it because doing so may require disclosing sensitive information or potentially injurious information as those terms are defined in s. 38 of the Canada Evidence Act, R.S.C. 1985, c. C-5.”
[Also, I wanted to know: “…how many of the persons associated with those accounts had already been reported by the United States to Canada for tax purposes…? See the answer in link to this question…]
— Still seeking Exit tax witness. Supporter suggests (and I agree) that anyone who took measures to reduce asset worth to avoid exit tax would be considered…
See in link questions posed by Plaintiffs to Government re: details on FATCA account info — and answers and objections from Government lawyers..
The government is trying to kill this before it even gets started.
Interesting, the Government is claiming the US under Donald Trump has signed up to the OECD CRS standard even though the US government clearly has not. Can the Arvay/Gruber team to get a deposition from Jim Jatras or someone with more knowledge of US response to FATCA reciprocity.
Also the Govt appears to ever so slightly be backing away from reciprocity as it’s justification under the Charter instead moving back to speak to the “commercial consequences” of FATCA non compliancy. I personally think from the government standpoint this is a fairly risky position. There are all sorts of Charter decisions that could and do have possible “commercial consequences” assisted suicide, prostitution, supervised injection. Many “conservative” countries like Saudi Arabia may choose to not do business with Canada because supervised injection or assisted suicide however, commercial consequences never came into play in those court decisions.
I thought I’d heard somewhere that proof of harm isn’t necessary in Canada.
So the IGA is just an excuse for the CRA to look into the bank accounts of a specific group of Canadians?
Thirdly, does the Government intend to bring forward it’s own expert witnesses to discuss what exactly ARE the “commercial consequences” FATCA non compliance. I have been waiting many many years for the Government and Canadian Bankers Association to describe in detail just what these consequences are.
I also note that “commercial consequences” sounds a lot like an argument of economic liberty on behalf of the banks which every Canadian Lawyer in their first day of law school is told NOT to bring up in a Charter context as there is not right of economic liberty in the Charter.
Overally, I get the feeling the government is just trying to what things they can throw against the wall and get to stick.
Fourthly when you say hopefully we will get to trial in 2017 does that mean there is a possibility of this going into 2018.
I may have missed this, but does the CRA specify what it does with the “information slips” it receives. Does it review it? If so, what is its protocole for deciding to forward information to the IRS.
For instance when asked about RRSPs etc they answer that these are not reportable. Do they assume banks will not report them? Or do they weed them out when banks report them?
According to the government’s vague answers to question 15, they have no idea how many accounts are lower value. Isn’t the highest yearly balance reported by the banks? How can they not have the answer to this question? If the CRA does compile and look at the data, this information would seem to be very easy to find. If the CRA does not compile and look at the data, we can then assume they forward everything without any safeguard, e.g. forwarding information about non-reportable accounts. We can also assume that banks feel safer over-reporting things, and that non-reportable accounts will inevitably be reported, moreover perhaps in the wrong category, e.g. a non-reportable retirement will be reported as savings.
Finally, from the answers given it appears that the government does not rule out using such information to affect a Canadian taxpayer’s situation vis à vis Canada.
@Fred (B)
Great questions, maybe I can provide answers for a few of them. This post provides some info:
http://isaacbrocksociety.ca/2016/08/17/bubblebustin-passes-along-some-information-to-help-other-canadians-searching-for-whether-or-not-their-banking-information-was-sent-to-cra-for-fatca-information-reporting/
My RRSP was not reported to the IRS, but the bank where I held it did report on another account that was <$50K.
The letter from the RM states what the CRA sent, not what it received from either of the banks that reported on me.
Maybe it would get the government’s attention if Canadians with a US filing obligation started filing their US returns first and then used the US tax paid to claim a nice big fat foreign tax credit on their Canadian returns to reduce their Canadian tax to zero. That makes sense because the US filing deadline (April 15) is 2 weeks earlier than the Canadian deadline, right?
This is what the government is referring to by Section 38 of the Canada Evidence Act.
http://laws-lois.justice.gc.ca/eng/acts/C-5/page-6.html#h-10
International Relations and National Defence and National Security
Marginal note:Definitions
38 The following definitions apply in this section and in sections 38.01 to 38.15.
judge means the Chief Justice of the Federal Court or a judge of that Court designated by the Chief Justice to conduct hearings under section 38.04. (juge)
participant means a person who, in connection with a proceeding, is required to disclose, or expects to disclose or cause the disclosure of, information. (participant)
potentially injurious information means information of a type that, if it were disclosed to the public, could injure international relations or national defence or national security. (renseignements potentiellement préjudiciables)
proceeding means a proceeding before a court, person or body with jurisdiction to compel the production of information. (instance)
prosecutor means an agent of the Attorney General of Canada or of the Attorney General of a province, the Director of Military Prosecutions under the National Defence Act or an individual who acts as a prosecutor in a proceeding. (poursuivant)
sensitive information means information relating to international relations or national defence or national security that is in the possession of the Government of Canada, whether originating from inside or outside Canada, and is of a type that the Government of Canada is taking measures to safeguard. (renseignements sensibles)
“Maybe it would get the government’s attention if Canadians with a US filing obligation started filing their US returns first and then used the US tax paid to claim a nice big fat foreign tax credit on their Canadian returns to reduce their Canadian tax to zero.”
It wouldn’t work. You get a Canadian tax credit for US tax on US sourced income, not for US tax on Canadian sourced income. Also you get a US tax credit for Canadian tax on Canadian sourced income, not for Canadian tax on US sourced income.
“That makes sense because the US filing deadline (April 15) is 2 weeks earlier than the Canadian deadline, right?”
The deadline for persons outside of the US to file US returns is June 15th, and form 4868 can extend it to October 15th.
I think the government, are now shoring up their section 1 Charter arguments. Harm,what harm befell these plaintiffs?
They are asking for more answers from the plaintiffs which we and our lawyers deem unnecessary and pedantic, let alone not legally relevant. For instance, here’s a little example. They really want to know my credits and debits from my chequing account? Sure, I could tell them the whole unabashed truth under oath. Because that would surely save all tainted Canadians in my position, since we are tax cheaters.
It goes like this: Thanks for the question Government Counsel. At the beginning of the month, your employer kindly gives us back via CPP and OAS payments an amount to which we contributed during our working years. Unlike government lawyers, most lawyers do not have an employer pension, so the other amount you see deposited in our account is my husband’s pension from his employer. Those are the credits. The debits are the usual household monthly expenses of the average family with one exception. Barclay,the greatest dog on earth eats a lot and is rather spoiled and gets more haircuts per year than I do. In the last few days of the month, we hold our breath and hope we make it to the end without going into overdraft.
And so my question to them is: how is this relevant to your section 1 argument?
So we have asked them to answer our written questions and they say they can’t. Why can they not tell us whose banking account information has been turned over to the IRS via the CRA, whether over or under the >50K aggregate. We’d like that on the record, whereas I can bet the farm that the average Canadian does not care what Barclay’s food costs are.
They want more particulars from the plaintiffs about our personal banking accounts. Barclay highly objects and my dog is an excellent judge of character. He is not fond of people who don’t like me. He was born ironically in the USA and always asks me if they are going to arrest him and extradite him. Through no fault of his own, his owners have not bought him dog tags in years. Because they are tax cheats apparently. He may have a good point on that one issue. But I do know how to economize on monthly expenses in case that question should arise: he gets no city dog tags.
Anyway to be serious ( which you note I try not to be here too often to preserve my sanity), these motions are typical in litigation. And sometimes they are not. Some would say signs of aggression actually reveal one side trying to shore up its weakness. Some would say each side is trying to advance its strengths.
What I am confident about is: we have the best lawyers who have years of experience dealing with the Federal Government and are familiar with these legal niceties ( OK, go ahead and call them delays etc) and will resist them accordingly.
It would be nice if litigation moved along in a more rational manner, but the truth is that it does not in the early days. The system is far from reasonable and reforms are long overdue.
The long dance goes on…and on… In actual fact, the motion will be heard or we will reach an agreement to whittle the issues down between the parties on consent.Both sides want to begin discoveries and move on to the hearing. It may or may not need a court giving both sides directions.
As per usual, we will keep you posted. We thank you for understanding that our lawyers, the Committee and the plaintiffs are working on this every day behind scenes. Sometimes to Barclay’s regret as I fail to take the time for his daily walks. Overall he is patient; he’s not a homelander is quite happy that he was rehomed in Canada.
Hmm. Maybe it’s time I coughed up a little money and get his updated permanent Canadian resident dog tag after all. But how would I justify that in my examination by the Feds? For the sake of reciprocity, should I have been sending an equivalent amount to the USG for his tags? He and I must be willfully non compliant. He did live there for a full eight weeks using up their resources as I did for five years. Why shouldn’t we be paying for that privilege, for the rest of our lives?
@ Canadian Ginny
After trying to enlighten while hampered by very slow moderation at cityam.com and jamaicaobserver.com for the past couple of days, it’s such a pleasure to read your comment here tonight and reenter the wonderful world of rational (you not the gov’t). When snow piled up on our roof last week to a depth of 4 feet in places I put my trust in our roof trusses. I can and will do the same with Joseph Arvay and the entire legal team. As for dear Barclay. All I care about is that he is loved and pampered and it’s obvious that he is. Hugs from his Auntie Em.
I thought that the point of a Charter Challenge was not so much about harms “actually” done but harms that could “potentially” be done because of the existence of a law on Canada’s books that “allows” the harm to be done. We want the law to be gone so that these potential harms can never be done to anyone, particularly at the behest of a foreign government.
@MuzzledNoMore
That’s our position too. However the gov’t seems to be pushing for a discussion about the harms already incurred and of course limiting it to the three plaintiffs, not the rest of you tax evaders.
We are having none of that. When Arvay won the Carder case, he argued on behalf of all Canadians with life threatening conditions, not just the plaintiff.
As I said, with his experience, he will get us through this. He isn’t the type that will allow the other side to dictate his case. Which is why we believe the credits and debits in any of our accounts are not relevant. It is the totality of the breaches of the charter rights of those of us deemed US tax citizens and also importantly the sovereignty of Canada, both issues which the gov’t resists.
@ND. Yes, I understand what you are saying. I was just indulging myself in a satisfying fantasy. But my point was that it is apparent that the folks running the Canadian government (politicians and career bureaucrats) still don’t understand that the real purpose of FATCA and the IGA is to carve off a slice of our Canadian wealth and send it south of the border. As such, the IGA harms not only the individuals targeted; it harms the entire country. I really don’t know what it will take to get them to wake up and smell the coffee.
@Ginny, the Government of Canada has forcibly stripped you of your Canadian Citizenship in the eyes of your Countrymen and the eyes of your neighbourhood financial institution.
A value can never be placed on that actual harm.
You are asking for nothing more and nothing less than to be treated EQUAL to your next door Canadian neighbour.
@George
The CAD gov’t has basically extradited me to the USA without my knowledge,and without due process. And my Canadian born non US tainted ( except for his unfortunate marriage to me) husband. Same for Canadian Kazia and Canadian Gwen and their spouses.
Needless to say, they won’t be pleased with our answers and statements at our discovery. As you stated, we are asking for nothing more than other Canadians. It’s that damn simple.
But if they want to talk harm, sure, we can do that. As can our lay witnesses. Every time we hear from the gov’t lawyers, it boosts my complete confidence in our case. Their shotgun approach will not succeed. I am confident when they opened their file and saw that Joe Arvay was representing us, they started to scramble for any possible argument.
Their goal was to save their banks and they threw us under the bus to do so, plain and simple.
Well, three women are here to tell them what else they could have done. Do they want to spend hours talking about my credits and debits in each of my accounts?
If so I will suggest all they had to do was spend three minutes drafting a simple clause which exempted any Canadian permanent resident or citizen. It was that simple. That’s the prime facie case made out right there.That’s all it would have taken Harper to appease Obama.
Best of luck to Trinidad and Tobago. Insert that one clause to protect your citizens, do not follow our gov’t’s lead.
Canada: Damages For Human Rights Breaches In Court Cases And Comparison To Human Rights Tribunal Decisions
The article refers to Ontario.
Would any of the same apply re human rights based on discrimination by nationality for one million Canadian citizens and their families?
Ginny: as you point out, this entire mess could have been very simply avoided by inserting into the IGAs the exemption of local permanent residents, or at the very least citizens. This would be like tacit partial RBT and a rational form of SCE. The EU could even have negotiated a situation where all EU bank accounts are exempted because it is common to have accounts in various EU countries.
I know nothing about the negotiations but I would guess that countries did not know that the US has CBT and did not think dual citizens were implicated. The only other option is they did not care.
@Fred (B)
They didn’t care. It was suggested to our government and they just laughed saying that the US government wouldn’t agree. They didn’t even try.
Thanks for your reply, Ginny. Good on all of you plaintiffs, witnesses and legal team for sticking to your guns! We’re behind you all the way!
“This Protocol [FATCA] isn’t limited to decent places like Canada and the U.S.—though even if it were, giving so much power to the tax agencies of the world is a bad idea.”
From,
How May the United States Leverage Its FATCA IGA Bilateral Process to Incentivize Good Tax Administrations among the World of Black Hat and Grey Hat Governments? A Carrot & Stick Policy Proposal:
Abstract
Professor William Byrnes examines whether it is prudent for taxpayers to trust the governments of the 117 countries that scored a fifty or below on Transparency International’s corruption index. The complete information system invoked by the Foreign Account Tax Compliance Act (FATCA) encourages, even prolongs, the bad behavior of black hat governments by providing fuel (financial information) to feed the fire of corruption and suppression of rivals. Professor Byrnes recommends that the United States leverage a “carrot-stick” policy tool to incentivize bad actors to adopt best tax administration practices.
https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2916444
@Bubblebustin
Have you tried reading that article by Byrnes? I find it impenetrable. On the first page he seems to set up a group he calls “Control Firsters” as a straw man to justify his arguments. Don’t you find it hypocritical that the IRS gets to judge whether another country is black hat, grey hat or, presumably, white hat? There’s no consideration of the morality of the confiscatory 30% “stick” in FATCA – just an argument for not applying the reciprocity “carrot” except to a handful of first world countries. Having skimmed through the paper twice, I’m still not exactly sure what the conclusions are.