I am not a lawyer, and the following is not legal advice. However, in reflecting on the wording of the Canada-US IGA and the wording of the Canada-US Convention (aka “treaty”) under which the IGA is signed, I pose the following question (which would need to be answered by a lawyer and maybe by a judge).
Given the wordings I have extracted below, can Canda Revenue Agency in fact and in law, and under these agreements, provide account information to IRS with respect to persons resident in Canada who are Canadian citizens (whether by birth or by naturalization)? This may hinge on the interpretation in law of the phrase “subject to the confidentiality AND OTHER PROTECTIONS” provided in the Convention (tax treaty), which Convention specifically EXEMPTS from collection by CRA any US tax liability claims made against any Canadian resident who is, and was at the time period for which the tax liability claims are made by IRS, OR WHO IS AND WAS PRIOR TO NOVEMBER 9, 1995, a Canadian citizen (no matter what time period for which a tax liability claim might be made). My non-legal mind certainly interprets that exemption as a “protection.”
Those of you who are Canadian citizens, are deemed by the US to be “US persons,” and who do not have and for whatever reasons cannot or do not wish to get a Certificate of Loss of Nationality of the US, might want to get legal advice on these points. Or perhaps someone who is a lawyer and is visiting this thread might care to express an opinion on this matter?
Sounds to me like there is ample room for litigation against any account reporting in violation of this “protection,” not only on Charter grounds but also on the grounds I am suggesting, based on the wording both of the IGA and of the Convention (suggesting as a non-lawyer, but someone who does understand the English language pretty well, I think, for whatever that is actually worth in legal matters …).
I am neither qualified nor interested in participating in any debate or replying to any questions on this post. I merely am offering this idea for your consideration, as and if you see appropriate. I am not going to follow replies to this thread, nor will I reply to them. (I have a CLN, my wife has a CLN, we are therefore not directly affected by the IGA, and I have spent all the time participating in blog exchanges on this issue that I intend to and have any more patience or energy for. But I haven’t noticed anyone else picking up on these points; perhaps there is a solid legal reason not to pick up on them, but if there is, I don’t know what it might be. And I would suggest only listening to a reason articulated by a qualified lawyer.)
The following are cut-and-paste extracts from both the IGA and the Tax Convention, as amended in 2007 (and as co-signed by Jim Flaherty, who as others have noted did not grace the IGA with his own signature, for whatever reasons).
From the IGA:
… Whereas, Article XXVII of the Convention Between the United States and Canada with Respect to Taxes on Income and on Capital done at Washington on September 26, 1980, as amended by the Protocols done on June 14, 1983, March 28, 1984, March 17, 1995, July 29, 1997, and September 21, 2007 (the “Convention”) authorizes the exchange of information for tax purposes, including on an automatic basis; …
… Whereas, the Parties desire to conclude an agreement to improve international tax compliance and provide for the implementation of FATCA based on domestic reporting and reciprocal automatic exchange pursuant to the Convention and subject to the confidentiality and other protections provided for therein, including the provisions limiting the use of the information exchanged under the Convention …
From “the Convention”:
Article XXVI A
1. Assistance in Collection …
8. No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that
(a) where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State, …
Amendment to “the Convention” co-signed by Jim Flaherty in 2007
… Article 22
Subparagraph 8(a) of Article XXVI A (Assistance in Collection) of the Convention shall be
deleted and replaced by the following:
(a) Where the taxpayer is an individual, the revenue claim relates either to a taxable period in
which the taxpayer was a citizen of the requested State or, if the taxpayer became a citizen of
the requested State at any time before November 9, 1995 and is such a citizen at the time the
applicant State applies for collection of the claim, to a taxable period that ended before
November 9, 1995; …
2. Exchange of Information
The competent authorities of the Contracting States shall exchange such information as is relevant for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes to which the Convention applies insofar as the taxation thereunder is not contrary to the Convention.
(my comment: Article XXVII(2) implies that “information” cannot be exchanged with regard to taxation “contrary to the Convention;” taxation COLLECTION against Canadian citizens clearly would be contrary to the Convention if conducted by CRA; the issue in law might well be whether “taxation thereunder” includes taxation collection thereunder, or for that matter account information clearly being provided solely for purposes relevant to making a taxation claim. I have no idea how that would sort out in a courtroom; perhaps a lawyer might offer an opinion on this?)
Use the above points in good health, as and if you can.