Here is the Memorandum of Argument of our Plaintiffs (Gwen and Kazia) for our FATCA IGA legislation lawsuit that was submitted on October 3, 2018 to Canada’s Federal Court. [Note that text is limited to 30 pages.]
The Memorandum can be found HERE.
The gist of our argument (page 12) is that the FATCA IGA legislation is inapplicable to Provincially regulated institutions and violates Sections 7, 8, and 15 of Canada’s Charter of Rights.
Some Excerpts:
— “The Impugned Provisions trench upon the core of the provincial power over property and civil rights because they constitute the regulation of a particular industry – the financial industry – and the regulation of this particular industry is an exercise of the provinces’ core powers over property and civil rights.40″
—“…although some US Persons in Canada have obligations under US law to report their Accountholder Information to the IRS, they generally do not have an obligation to report this information to Canada.”
…“Canada admits that it does not know how many account records have been shared with the IRS which are associated with individuals who are not US Persons.49…”
—“That the Impugned Provisions authorize warrantless searches without any notice or means of judicial review of any kind is undisputed and fatal to their reasonableness.”
—“But Canada has admitted that it does not oversee – meaningfully or at all – the conduct of Canadian FIs in determining whose Accountholder Information will be reported to both Canada and the United States.”
—“…it is impossible for Canada to establish that its own use for domestic tax compliance purposes of Accountholder Information obtained pursuant to the Impugned Provisions (to which it admits63) is reasonable because Canada’s use of that information is unrelated to the objective underlying the Impugned Provisions.”
— “The plaintiffs and other reasonable hypothetical individuals have a reasonable expectation of privacy in their Accountholder Information. Canadian courts have observed that personal financial information prima facie attracts a reasonable expectation of privacy, and that individuals can reasonably expect their financial institutions to keep their information confidential.
—“Canada cannot justify the s. 8 infringement under s. 1 of the Charter because it cannot demonstrate that the Impugned Provisions minimally impair s. 8.”
—“Most importantly, the Impugned Provisions undermine the Group’s access to a basic aspect of full membership in Canadian society by denying them the protection of Canadian sovereignty by exposing them to the extraterritorial enforcement of another state’s taxation and tax compliance regime.”
NEXT STEPS:
— Canada responds to our Memorandum of Argument by November 21, 2018.
— We reply to Canada by December 7, 2018.
— Trial is held in Vancouver beginning January 28, 2019
The real-world situation in Canada today is:
1. No self-identified US person is denied banking or investment services. (Only exception I can think of is one small regional bank that got some bad press a few years ago for refusing new US citizen customers.)
2. No US citizen or US person who does not self-identify as such is reported under FATCA. No effort is made by banks to validate customers’ answers for truthfulness. (As birthplace or citizenship information was never recorded, US indicia such as past mailing addresses or phone numbers on file can be explained away.)
Basically, two categories of US-born Canadians already enjoy de facto “protected” status:
1. Those who honestly (though mistakenly) don’t believe themselves to be US citizens, and behave accordingly.
2. Those who know themselves to be dual, but also know how to answer FATCA questions. (I loathe the “red pill” metaphor now that it’s been adopted by sad alt-right male losers, but it’s a pretty good description of this second group.)
All that being said, I’d rather rely on de jure than de facto.
The US has multiple classes of citizenship, but Canada doesn’t have to respect them. There is a far simpler solution.
First let me recap some US classes.
A person who resides in a US overseas territory such as Puerto Rico or American Samoa doesn’t have to file a US tax return (except maybe for US-sourced income) regardless of whether they are or aren’t a first-class US citizen in other ways.
A person who is a US first-class citizen and moves from Puerto Rico or American Samoa or Michigan has all the problems we’re discussing here.
A person who is a US non-citizen national and moves from American Samoa (or from Puerto Rico or Michigan where they might have lived after leaving American Samoa) to Canada can continue not filing a US tax return (except maybe for US-sourced income).
So in an alternate universe where the US has some sense of justice, the US could solve the problem by implementing CBT. But Canada can still solve the problem in Canada without respecting the US’s classes of citizenship.
The treaty provision that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian citizen should be changed so that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian RESIDENT.
And also recognize that penalties are penalties, and not provide collection assistance for penalties.
Just curious, will this trial touch on the intent of FATCA? I believe the pretrial touched on it.
Intent: prevent tax evasion by U.S. based residents from stashing money overseas to evade taxation. One might argue that such intent would target known tax haven countries.
That would be a refreshing approach instead of a focus that may be described as “the law is the law.”
The legal action (as I understand it) is about the rights of citizens of Canada (Britain, France, Australian, etc) who have a US birthplace. Not about US intent; not about how the US-born citizens of Canada can hide, or avoid detection, or suffer forced assessment without suffering collection, or in any other way have to find a workaround to the discrimination which Canada (Britain, France, Germany, etc) has unjustly and arbitrarily imposed on a small minority of citizens.
IGA1 governments need to answer the damned question: do they wish to impose on their US-born citizens the lifelong obligation to pay US taxes just as if they were not even residents of (Canada, France, etc) but were living in the US? Do the governments wish to implement that policy, and impose it on US-born citizens?
If the answer is yes, the IGA1 governments ought to bring legislation before their respective parliaments, allow the issue to be properly debated by the representatives of the people, and bring it to a vote. And if they win the vote, they can incorporate the US tax code into national law – applicable only to citizens born in America.
Doing this shit on the sly by sneaking a treaty through parliament without debate and without a vote is a denial of justice.
“One might argue that such intent would target known tax haven countries.”
Such intent wouldn’t target the known biggest tax haven country.
Norman Diamond:
“The treaty provision that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian citizen should be changed so that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian RESIDENT.
And also recognize that penalties are penalties, and not provide collection assistance for penalties.”
But such changes can’t be done by Canada, of course, without US agreement.
That’s presumably why rights-infringing provisions on information-sharing and foreign-tax-collection are included in a treaty that’s supposedly just concerned with good stuff like the avoidance of double taxation. (Oh, and the avoidance of double non-taxation – like what would happen if the US didn’t tax a USC’s tax-free pension.)
Canada, and the other IGA1 countries, could have found a simple administrative way to make it possible for the banks to comply with their US tax obligations while also complying with domestic law. They chose instead to use FATCA as a pretext for gaining a measure of control over the banks – riding roughshod over US-born citizens’ rights in the process. They need to be required by the courts to reverse those actions and allow US-born citizens to self-certify under FATCA in the same way non-US-born citizens can self-certify under CRS.
IMO.
“The treaty provision that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian citizen should be changed so that Canada will not provide collection assistance for alleged US tax debts incurred while the person is a Canadian RESIDENT.
And also recognize that penalties are penalties, and not provide collection assistance for penalties.”
‘But such changes can’t be done by Canada, of course, without US agreement.’
Well sure, speaking practically, no Canadian house of parliament or court or anything can act without US agreement. But in a parallel universe where Canada has sovereignty, the change to Canadian RESIDENT could be made using the Last In Time Rule, and recognition that a penalty is a penalty can be done without even that.
“no Canadian house of parliament or court or anything can act without US agreement.”
I’m not talking about sovereignty or the lack of sovereignty. A bilateral treaty is an agreement that has to be signed by both parties in order to come into effect. That means that both parties must agree to every provision – including those which apply only to USCs, or only to non-USCs.
The wrong that is being done to US-born citizens of IGA1 countries is being done by each IGA1 government. Each IGA1 country (Canada, Britain, France, etc) needs to stop trying to hide behind bilateral international agreements and “national interest” special pleading, and just stop discriminating against its US-born citizens.
In short, it’s reasonable and desirable (IMO) for the IGA1 countries to refuse to harbour criminals, of whatever national origin.
It’s not reasonable for (say) France to treat French accounts in French banks, held by French citizens residing in France, as “offshore” accounts opened for the purpose of hiding income from the IRS.
WITHOUT EVER ALLOWING THE FRENCH CITIZEN A CHANCE TO OBJECT!
As if it was none of the accountholder’s business; just a matter to be determined between the bank and the French government and the American government.
What kind of crap is this……https://www.msn.com/en-ca/money/topstories/stats-canada-requesting-banking-information-of-500000-canadians-without-their-knowledge/ar-BBOX3BK?li=AAggFp5&ocid=mailsignout WELCOME TO CANADA!!
‘A letter from the agency to a Canadian bank says the “individual-level financial transactions data” will be “used for statistical purposes only.”
“Section 13 of the Statistics Act authorizes the Chief Statistician to compel the disclosure of, and obtain, any documents or records that are maintained in any department of in any municipal office, corporation, business or organization, from which information is sought in respect of the objects of the Statistics Act,” the agency said.’
Right. Well, now we know…
We thought there were 1,000,000 US citizens (including duals) in Canada, but now we know there are only 500,000. They have been selected randomly, with a 1 in 1 chance of being selected at random.
Statistics will show:
These persons made 5 donations to ADCS. The 5 is a statistical number. The randomly selected group of persons is in this list…
These persons made 4 donations to ADCS. The 4 is a statistical number. The randomly selected group…
…
These persons made 0 donations to ADCS. The 0 is a statistical number. The randomly selected group…
Overall statistics show that 0.001% of US citizens (including duals) in Canada care about defending Charter rights. The others thought they were flying under the radar.
@ NativeCanadian
Absolutely it’s crap. Here’s another article where the comments are probably 99% against this atrocious idea but where were THEY when Canadians with a taint of USness were being thrown under the FATCA bus?
https://globalnews.ca/news/4608105/trudeau-defends-statistics-canada-move-to-collect-banking-info-of-500000-canadians/?utm_source=Other&utm_medium=MostPopular&utm_campaign=2014
First they came for … and then they came for … and then, oh crap, they’re coming for everyone … and nobody did/does anything about anything (ADCS excluded, of course).
Still on track for five day-max FATCA IGA legislation trial in Canada Federal Court in Vancouver beginning January 28 2019 (next month!) — been a long long time since we began this lawsuit with your kind support.
Procedural update resulting from Case Management Conference:
“Vancouver 03-DEC-2018 BEFORE The Honourable Madam Justice Mactavish Language: E Before the Court: Trial Management Conference Result of Hearing: Matter heard – no oral evidence to be given at summary trial, Defendant’s preliminary motion to be heard at the commencement of summary trial hearing, 5 days for hearing will suffice, Agreed Statement of Facts to be provided by 14-JAN-2019, joint condensed record may be provided held in Court Duration per day: 03-DEC-2018 from 02:00 to 02:12 Courtroom : Discovery Room (701) – Vancouver Court Registrar: Julia Orchard Total Duration: 12min Appearances: Mr. Arden Beddoes (ARVAY FINLAY LLP) (604) 696-9828 representing Plaintiff Donnaree Nygard/Michael Taylor/Marta Zemojtel (JUSTICE CANADA) (604) 666-2061 representing Defendant Comments: back-up record used Minutes of Hearing entered in Vol. 1012 page(s) 233 – 236 Abstract of Hearing placed on file”
Soon. Soon.
Thanks for the update.
@ Stephen Kish
Update noted (thanks) … fingers crossed!
FATCA IGA litigation in Canada Federal Court update:
Today our side submitted another reply to Canada.
We now have, in my opinion, the guts of our position and that of Canada, and a lot of back of forth, all in written form, in four different submissions.
They are: Our (Plaintiffs Gwen and Kazia) complaint, Canada’s response to our complaint, our response to Canada’s position that our witness affidavits be stricken, and our general reply to Canada’s response to our complaint.
I will try to have a link for each of these documents on our ADCS website in a few days.
The next major step will be for the arguments to be fleshed out in orals at the January 28, 2019 Vancouver trial.
Any of you going to come to the trial?
Thank you for the update, Stephen.
I plan to be there at least on the 29th. I’m also hosting another info session of John Richardson’s at my condo building that evening, 7pm, 1010 Richards St (Richards and Nelson).
I look forward to seeing many of you.
BB,
Thanks!!
I know that Vancouver is far away from many of our supporters, but I think that it would be helpful if we had a group of supporters in the courtroom.
So far, that January 28 for four-five days date has not changed.
@ Stephen Kish
“… our response to Canada’s position that our witness affidavits be stricken …”
The government actually asked for that? Good grief! I take it they didn’t get away with that maneuver.
It was technically possible (but unlikely) for U.S. Congress to vote on, and actually pass in 2018, a bill that might help some citizen-residents of other countries who are deemed by the United States to be U.S. persons.
The advisory from Solomon Yue (Republicans Overseas) who has been pushing for this, indicates that it will not happen in 2018 and not before our January 28, 2019 Federal Court trial in Canada. [Note that our Canadian Charter rights are violated by the Canadian FATCA IGA legislation round up and turnover irrespective of the specific U.S. tax law at the time of the unwarranted turnover without consent.]
See the text below from Solomon. He acknowledges that some may need to renounce their U.S. citizenship (“please don’t wait”) before the major tax bill is sorted out in 2019.
Taken from:
https://www.facebook.com/groups/citizenshiptaxation/
Stephen Kish:
“Note that our Canadian Charter rights are violated by the Canadian FATCA IGA legislation round up and turnover irrespective of the specific U.S. tax law at the time of the unwarranted turnover without consent.”
And in France also, it is the French IGA legislation that is being challenged for breaching the rights of French citizens.