Category Archives: Issues regarding US persons abroad

Recently I posted Arrow’s article at the Vancouver Sun concerning Peter Hogg’s letter to Finance Canada on LinkedIn. I just read a very interesting response from Jeff Mukadi, a Toronto tax law and compliance professional.   (All emphases are mine).

He has published an article, ““FATCA Getting Rid of U.S. Clients Will Not Get You Off the Grid,” Journal of International Taxation, November 2012. He argues that foreign citizens affected by FATCA should bring their governments to court through class action suits to invalidate FATCA/IGA’s for unconstitutionality. He discussed some excerpts of the article; and makes a very strong case for the absence of reciprocity and true quid pro quo. “Reciprocity is not simply an exchange of one thing for anything, but one right for the same right and one obligation for the same obligation.” As we all know, this is simply not what the US is “offering.”

What is most interesting is his suggestion that FATCA cannot be implemented in Canada not only because of our privacy laws but more importantly, because of the Foreign Extraterritorial Measures Act  (R.S.C., 1985, c.F-29). This Act was designed specifically to “deny  effect to extraterritorial Acts of foreign governments violating Canadian sovereignty.”   The US National Defense Authorization Act (“Cuban Assets Control Regulations,” July 8, 1963) was such a measure and prompted the issue of the  Foreign Extraterritorial Measures Act (United States) Order of October 9, 1992 (SOR-92-584).  By authority of the  Canadian Attorney General jointly with the Secretary of State for External Affairs, SOR-92-584 prohibited a Canadian corporation, or director, officer, manager, or employee in a position of authority of a Canadian corporation, from complying with this U.S. law. So in addition to not joining the “Coalition of the Willing” in 2003, we have another instance of Canada standing up to the US. Mr. Mukadi emphasizes the fact that since FATCA is even more agressive than the US National Defense Authorization Act, “it is certain that SOR-92-584 will always be invoked as a precedent against any attempt to implement or enforce FATCA in Canada.” Since governments are not taking care of their primary duty, that of defending their sovereignty and protecting citizens, it might be easier to fight FATCA in the courts. And until this happens, we cannot know if we can be safe from FATCA.

He indicated he would send me the article so I hope I can pass on more. I also contacted Allison Christians to see if we could get her take on it. In any regard, this sounds like another specific “weapon” we can use in this fight and I believe we should let our government know we are aware of it.

UPDATE:  Mr. Mukadi has kindly provided a copy of his article:  FATCA JOIT Article November 2012 – Final Galleys Mukadi FATCA