Monthly Archives: September 2015

Justice Martineau provides @ADCSovereignty the only thing worse than a root canal

 
UPDATE:
Please go to these articles about the lawsuit and comment:

Financial Post

Globe & Mail

 
cross posted from the ADCSovereignty WordPress blog
 

Part 1: Justice Martineau provides @ADCSovereignty the only thing worse than a root canal

 

I  left my root canal appointment this afternoon to a message announcing that Justice Martineau had rendered his decision. We did not win round 1. Notice that I did NOT say that the Government won round 1.

Here is the decision:

T-1736-14 decision sept-16-2015

Before, I comment specifically on the decision, I want to be clear on the following points:

  1. This decision marks the end of the beginning. It has always been clear that this litigation would NOT stop at the first level of trial.
  2. The “summary trial” on the Tax Treaty issues was a “carve out” of the main Charter issues.
  3. Obviously we continue on.

I am not surprised by the result – that is a “win” or a “loss”. What I am surprised at is the content of the decision (which I will get to in a moment).

But first some general thoughts/feelings/comments …

A. As you know, the CRA has announced that it will be sending the results of “FATCA Hunt” to the IRS on September 23, 2015.

This is hardly a surprise, given that Canada, has been and continues (under the Harper Government) to be a “World Leader” in FATCA implementation. Obviously this is  a great disappointment. My guess is that it will be a long time before there are any specific results (meaning letters from the IRS) from this.

This is the beginning of a long struggle. Remember, this is a “marathon” and NOT a sprint. Concern is appropriate. Panic is not. Justice Martineau’s decision does reinforce the principle that the Treaty does NOT obligate the Canada Revenue Agency to assist the IRS in collecting tax on Canadian citizens. Do NOT do anything that is reckless and is a reaction to this decision (as opposed to a response). You will be subject to a good deal of “fear mongering” from various people (accountants, lawyers, bankers …). You should deal with this situation “one FATCA letter at a time”. Remember that a “FATCA Letter” is a letter that indicates that you are under “suspicion of being a U.S citizen”. It does not mean that you are a U.S. citizen.

images (15)The only difference between today and yesterday is that Justice Martineau has ruled against us – clearing the way for the next step.

In any case, Justice Martineau has “cleared the way” for the CRA to send your account information to the IRS. This is not good news.

B. It’s important to see this decision as an event that brings us one step closer to moving this issue through the courts.

For those of you who see the result as failure (and I don’t) I remind you that every failure brings us one step closer to our next success.
 

As George said over at Brock:

“Ladies and gentlemen, we go back to work and keep moving forward.”

I believe that it will end at the Supreme Court of Canada. The jurisdiction of the Supreme Court of Canada is “public importance”.

Interestingly Justice Martineau did NOT make a “costs award” against Gwen and Ginny. He wrote (p 44):

 

“There shall be no costs. This is a case where, in view of the nature of the issues and the public interest involved in clarifying the scope of novel provisions affecting hundreds of thousands of Canadian citizens, no costs should be awarded against the losing parties.”

It strikes me that this is a recognition of the “public importance” of the issues involved, confirming that this is a case that should eventually be heard by the Supreme Court of Canada.

C. Thoughts on Justice Martineau’s decision …

Full disclosure – I read the decision very very quickly. It is 46 pages. I will read it again later, much later. There doesn’t seem to much substance to the decision. A huge part of the decision simply recites the terms of the IGA and the implementing legislation.

Basically, what Justice Martineau says is:

– the IGA was of great benefit to the banks and was supported by the banks (p 21)

– “Congress has spoken” (have you heard that before): Meaning this is a political decision in the United States

– The Government of Canada has the right to make and interpret tax treaties that involve “information exchange”. In this context, it is NOT for the Government of Canada to question the relevance of the information to the enforcement of U.S. tax laws in Canada. Treaties are about giving the treaty partner country information that they want (p 43)

– Whether the IGA is a Treaty or not is irrelevant (from a Canadian perspective) . Either way it is consistent with and within the purview of what is allowed by the Canada U.S. Tax Treaty (p 29)

– If you are a dual citizen, too bad. That’s simply the price of U.S. citizenship or dual citizenship (he doesn’t seem to get that citizenship is being forcibly imposed on people who  believe that they relinquished U.S. citizenship years ago)(p 44)

– Justice Martineau adopts the distinction between the “assessment of taxes and penalties” and the “disclosure of information”. In other words, he rejects the submission that the Government of Canada is assisting the U.S. to collect tax on Canadian citizens. (p 42)

I would imagine that many, many expats will disagree with this last point, as Dash said:

I think Justice Martineau’s ruling boils down to the following:

“Accordingly, in the absence of concrete evidence, it is speculative to suggest that the automatic collection and disclosure of taxpayer information mentioned in the IGA is tantamount to providing help to the US authorities in the collection of taxes.”

This is where I strongly disagree with Justice Martineau. Collecting information about someone’s assets (not just income) can serve no purpose other than to assist in collecting taxes.

 

What this means …

In the world of FATCA, IGAs, and tax treaties the rights of individuals (if they have any) are subordinated to the broader purposes of the information exchange. Justice Martinueau says: “Just renounce” (have you heard that before)? -(p 27)

On the one hand Justice Martineau’s decision may be consistent with the interpretation of  the Tax Treaty.

On the other hand Justice Martineau’s decision makes it clear that individual rights are irrelevant to Tax Treaty interpretation.

The Charter of Rights, on the other hand,  is about the recognition and protection of individual rights. It strikes me that the lack of concern for individual rights in Justice Martineau’s decision (whether correct as a matter of law or not) may strengthen the validity of the Charter of Rights claims.

In closing …

This post is a quick message to supporters. I want to emphasize how much we at the Alliance For The Defence of Canadian Sovereignty value your support and thank you for it! I repeat we thank you. This lawsuit has been and continues to be about you.

I will reread the decision and update this post later this evening or early tomorrow.

John Richardson

P.S. Canada is the country most affected by FATCA and the country with the “moral authority” to resist FATCA. The Harper Government could have chosen to be the “FATCA Terminator”. Instead it decided to establish itself as a “World Leader In FATCA Implementation”. This is further evidence of the Government of Canada behaving as “managers” instead of as “leaders”.

On October 19, 2015 you might remind Prime Minister Harper how you feel about his surrendering Canada’s sovereignty to the IRS.

We Did Not Win the First Round

Justice Luc Martineau has delivered his Decision in the Summary Trial.

i have not read it thoroughly yet, but this indicates information may be transmitted because Justice Martineau has ruled FATCA does not violate the Income Tax Treaty.

Significantly:

[9] I have concluded that the collection and automatic disclosure of account holder information about US reportable accounts (see paragraphs 28 to 34 below) contemplated by Articles 2 and 3 of the IGA is legally authorized in Canada by the provisions of the IGA Implementation Act and Part XVIII of the ITA. Moreover, contrary to the assertions made by the plaintiffs, I find that the collection and automatic disclosure of any such information is not inconsistent with the provisions of the Canada-US Tax Treaty, and does not otherwise violate section 241 of the ITA. Basically, I endorse the general reasoning and the legal arguments submitted by the defendants in their written submissions and reasserted at the hearing by counsel.

Fortunately, he did not award costs to the government so Ginny and Gwen are not responsible for those.

77] For all these reasons, the declaratory and injunctive relief requested by the plaintiffs in their motion for summary judgment shall be denied by the Court, without prejudice to the plaintiffs’ right to pursue their claim that the impugned provisions are ultra vires or inoperative because they are unconstitutional or otherwise unjustifiably infringe Charter rights. There shall be no costs. This is a case where, in view of the nature of the issues and the public interest involved in clarifying the scope of novel provisions affecting hundreds of thousands of Canadian citizens, no costs should be ordered against the losing parties.

Please note, this is a decision on the Summary Trial involving the Income Tax Act and Income Tax Treaty issues and not on the Charter and constitutional issues.

The fight continues……

UPDATE September 17, 2015: I have read the decision a bit more thoroughly. My non-lawyer sense of it is Justice Martineau agrees with Canadian Parliament that “Congress has spoken.”

ADCS Directors are considering options. I think Stephen will post further information as things progress.

Green Party Promises to Repeal FATCA

At last, one of the parties has promised to repeal FATCA if elected.

The Green Party platformpledges:

We will repeal as unconstitutional the Foreign Accounts Tax Compliance Act (FATCA). It essentially deprives any Canadian with US connections (even those short of dual citizenship) of full rights to privacy and treats them as a lesser Canadian.

In addition, the Green Party vows:

We will also repeal Bill C-24 which allows the minister of citizenship to revoke citizenship. Other threats to Canadians will be eliminated with the repeal of Bill C-51.

The Green Party says It’s Time to Restore Democracy. Amen.

Thanks to Tim for sending this to several of us.

I like what I see. Now if the Greens only had a chance of forming the government. At least we know Elizabeth May and the Greens are in our corner and still fighting for us.

USA Charging $2350 U.S. for Relinquishment

Cross Posted from Brock. The United States Department of State has announced they charging $2350 U.S. to relinquish unwanted American citizenship.

From a post by Eric at Brock:

Closely following on the heels of their previous announcement that the $2,350 fee for renunciation — twenty times as high as in any other developed country — “protects” the human right to change nationality, the folks at the State Department have announced that they’ll be extending that “protection” to people who relinquished U.S. citizenship under 8 USC § 1481(a)(1) through (4) and seek to obtain Certificates of Loss of Nationality documenting that fact as well.

In the latest Schedule of Fees for Consular Services to be published in the Federal Register on Tuesday (80 FR 53704, 53707), Under Secretary of State for Management Patrick F. Kennedy or one of his ghostwriter minions proclaims:

Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.

If you do not need a CLN in the first place, nothing in the Immigration and Nationality Act requires you to obtain one to document your loss of US citizenship, and people who relinquished before 4 June 2004 did not have to report their relinquishment to the State Department in order to end their status as U.S. tax subjects either. However, FATCA regulations and IGAs require people with U.S. indicia to show their banks a CLN or provide a “reasonable explanation” of why they do not have U.S. citizenship.

See this earlier post for discussion of what banks might accept as a “reasonable explanation”, and let us know if you find a bank which will accept the absurd price-tag as an explanation of why you don’t have a CLN.