We Intend to Commence Litigation Challenging Canadian FATCA IGA Implementation Legislation on Behalf of All Persons in Canada and Those Impacted by FATCA in the Rest of the World

Stephen Kish and Lynne Swanson have reviewed the legal opinion provided by constitutional lawyer Mr. Joseph Arvay on the constitutionality of the pending legislation “Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act”.  This act is aimed at implementing the “Intergovernmental Agreement” (IGA) designed to make the “Foreign Account Tax Compliant Act” (FATCA) operative in Canada.
The opinion has also been discussed with Mr. John Richardson, a Toronto lawyer, with whom we now have solicitor-client privilege, and who will be part of Dr. Kish’s and Ms. Swanson’s “litigation committee”.
The lengthy opinion provides in detail the pros and cons of the arguments, and possible outcomes.
There are good arguments that the proposed legislation infringes at a minimum on constitutionally protected rights and freedoms.  Nevertheless, there are also arguments that the Government of Canada may employ to counter our position and, we emphasize, there is no certainty that litigation will be successful.  Further, any litigation will be hard fought and very expensive.  This litigation is not for the faint of heart.
Given the opinion of Mr. Arvay and discussion with Mr. Richardson, we advise that it is our intention to take all necessary steps to commence litigation against the Government of Canada once the IGA implementation legislation is enacted.  Moreover, the nature and impact of the unprecedented legislation on all persons in Canada and those throughout the world who will be impacted by FATCA demands that we exercise this option that is in the public interest.
Very significant fundraising will be required.
Stephen Kish
Lynne Swanson
Cross posted at Isaac Brock Society


34 thoughts on “We Intend to Commence Litigation Challenging Canadian FATCA IGA Implementation Legislation on Behalf of All Persons in Canada and Those Impacted by FATCA in the Rest of the World

  1. Let me be the first to congratulate you on all of your difficult work and your judgement of the decision, after review of Mr. Arvay’s opinion, to go ahead with the Charter Challenge on behalf of All Persons in Canada and throughout the world who will be impacted by FATCA (and the precedent FATCA law allowed into foreign countries sets).
    I am pleased that John Richardson has helped with this and will be part of the “litigation committee” for this challenge.
    Thank you so very much.

  2. Yes, congratulations and thanks to you both for getting this challenge off the ground. It will be a long road but, completely worth it.

  3. Congratulations and thanks to Stephen Kish, Lynne Swanson, Joseph Arvay and John Richardson. I support you in this upcoming legal battle. Not for the faint of heart indeed but we need to defend our rights and freedoms. I realize this as I close accounts at the big banks and prepare for my relinquishment appointment at the U.S. Consulate. Let’s keep up the good fight.

  4. Another congratulations!
    As this matter winds it’s way through the legal system, it will be interesting to see the extent of involvement of the CBA and similar organizations supporting the government side.
    It will be a tough fight, but I’m confident of victory.

  5. @Hazy, Others My personal opinion is that this will be a brutal battle. I expect the government, the CBA and banks with unlimited resources will do everything they can to make this as difficult and costly for us as possible.
    As Stephen and I said, this will not be for the faint of heart.

  6. This is a vitally important battle for all Canadians, and especially all naturalized Canadian citizens of no matter what ethnic or national origin, because of the precedent set by this sell-out of our national sovereignty and the Charter rights of a segment of our citizens and residents.
    We need to reach out to other immigrant communities, some of which are rumoured to have switched allegiance to the Tories in the past election, alerting them to the treacherous sell-out by Harper and his gang. That may shake loose what Tory support there is or might be developing in those communities, I hope.
    I’m hopeful than many other traditional Tory constituencies can be prised loose from Tory voting in the next election and help bring down this government, over FATCA and many other issues. This weekend’s news of how a Calgary constituency rebelled against Harper’s personal endorsement of Rob Anders and voted in his opponent Ron Liepert instead, shows signs that even Alberta Tories are getting fed up with Harper and his PMO and control-freak bullying and dictatorial approach to running his government and our country. A recent online poll of CARP members, most of which respondents are over-55 males mainly from Ontario and BC and who until recently were predominately Tory-leaning, are furious and very negative about the Unfair Elections Act, to the point where this month’s voting-intentions poll in that demographic showed the Tories slightly behind the NDP, at about 15% (NDP at 16% which is roughly where they’ve always been in that particular poll) vs the Liberals at 39%. If Harper’s support is unravelling even in Calgary ridings and among a traditionally-conservative retired demographic, FATCA and the whole omnibus approach to legislation on top of everything else could very well sink this government. I don’t seriously expect a backbench rebellion on the Bill C-31 vote on FATCA or anything else, but I can’t believe that many Tory backbenchers aren’t either very nervous/upset about the way this government is heading and also concerned about their personal prospects in the next election. Harper and crowd (and Flaherty’s legacy for that matter) are going to come out of this charter challenge very, very damaged IMO.
    Let’s hope the CCLU and the opposition parties can be recruited to help or support this, in some ways. Though this really shouldn’t be a partisan issue, sovereignty and citizens’ rights never should be, but it’s Harper and his gang who have made it so, and they’re going to have to wear it.
    Punish the Tories in every way you can. ABC, and Heave Steve in 2015.
    The charter challenge won’t be for the faint of heart, but neither is what the Tories are doing to our country. Help ensure that running for election or re-election as a Tory isn’t for the faint of heart, either!

  7. This litigation may be taking place in Canada, but every non-homelander “US person” on the planet will be 100% behind the case. The handling of media will be crucial, not only to raise awareness of government actions but also to get the word out widely that contributions will be required. I am sure it is on your list, but a website that can be linked to is essential to raise attention internationally, not just in Canada. Although you will obviously need to take the Canadian angle, I hope that you are able to portray this as being a battle on behalf of all USP, so that those in other countries will be willing to contribute.

  8. Thanks Lynne and Stephen for being our reps and for all your hard work and dedication. Also thanks to Trish and Gwen for their important roles in helping to get to this point. I’m happy to hear that John Richardson will be part of the litigation committee.

  9. @ Blaze
    My question is this: Joe Arvay has delivered to you his assessment of the situation, both pros and cons. This very experienced man knows this field inside and out. Probably knows which way each Supreme Court justice leans on any particular matter. So, Mr Arvay is in the position of being able to say, on a balance of probabilities, that we have an X % chance of winning this if this gets to the Supreme Court. What is X ?
    I join the many others in saying thank you. Glad to see John Richardson is joining the “Litigation” team.

  10. It is good that little detail will be published and we should not ask for more.
    The standing assumption must be that on the balance of probabilities, success in Court on at least one ground is likely.
    John Richardson will be able to fill in many holes with a personal touch and flair. Arvay is the pit bull out front.

  11. I’m glad to hear that this is going ahead, and I will contribute again. It’s vital, I think, to challenge this attack on citizenship and sovereignty, and I agree absolutely with Schubert that this issue should concern everybody who is not a Canadian-born child of two Canadian-born citizens (and married to somebody with a similar pedigree!) If that is a message that we can get out, it could help with fundraising, and it could also help turn this into a major election issue. I’ve written my Tory MP (elected by a few hundred votes) making very clear that in the next election, my vote and my husband’s vote will be going to the Liberals, or whatever candidate is best poised to take the seat, even though we’ve always voted NDP or Green. We will do our part to avoid splitting what was, last time, the substantial majority non-Tory vote in our riding.

  12. Wonderful to hear, thanks to all the efforts of that dedicated core of people who have worked so hard and so long on this.
    I, of course, will contribute some money again, and if there are other things I can do, I will as well. I am concerned about us being able to meet the cost, as so many of us are just regular folks who won’t be able to contribute large amounts, and I sincerely hope some foundations, and other people with bigger pockets will help to fund this. We have to find a way to do it – it is SO critical. I completely agree with some of the other comments here – this MUST be stopped here. If the govt gets away with this, I am positive it will be only the first step in a gradual eroding of all Canadian citizens’ rights. It will not stop here.

  13. Bravo that you will “commence litigation…once the IGA implementation legislation is enacted”.
    But could the legislation be passed by parliament and not enacted?
    I’m thinking (broadly) King-Byng Affair. Not to divert Mr. Arvay, but could the governor general be petitioned to refuse to proclaim extra-territorial U.S.-dictated legislation illegally forced upon Canada by extortion?
    I’ve not seen this suggested before (maybe there’s a reason for that!).

  14. That is OUTSTANDING news. You’ve got my full support. Just tell me where to send the check. I will also do a Flophouse piece on it (Lynne, can I call you for an interview?)
    I also just posted a link on the AARO newsfeed along with an article about a FATCA discrimination case in The Netherlands. Hopefully this will give us US persons around the world heart and maybe spark movements in other regions.

  15. @Victoria: Yes, but an interview will need to be from my personal perspective. I am restricted in what I can say about the legal opinion or the litigation.

  16. @Everyone: I will now be posting on issues relating to legal action and possibly on other issues under my real name instead of as Blaze.
    As I said in my response to Victoria, I am limited in what I am able to say about the legal opinion or the litigation. However, Stephen Kish and I intend to do our very best to ensure the voices of Canadians are heard. We hope our efforts in Canada will help people around the world.
    This effort is going to take lots of money. We need the support of people inside and outside of Canada to do it. We are not yet ready to accept donations, but please be prepared to help when we are ready.
    If anyone knows of any potential large donors, please contact me  immediately at maplesandbox at yahoo dot ca


  17. Before, I begin Blaze do you really think it is safe for people to sign up through US based Facebook and Tweeter. Anonymity is the one of the beat way to avoid detection.
    Please note, that I did not copy and paste this to a word processor so the grammar and spelling is probably off. My eyes also go crazy when I have to look at a computer screen for a long period of time.
    a) Have the lawyer also looked at overturning the 1995 US Canada Tax treaty which allows for collection of US taxes if Canadian resident or citizen were not citizens at time tax occurred. This is the way USA & LIberal Party of Canada subverted ruling given in
    “Supreme Court of Canada
    United States of America v. Harden, [1963] S.C.R. 366
    Date: 1963-10-02”
    The respondent has paid nothing on account of the judgment and is now resident in the Province of British Columbia.
    The ground set up in the notice of motion to set aside the writ reads: “that this Court has no jurisdiction to entertain the claim endorsed thereon”.
    At the conclusion of the argument of the motion before Maclean J., which occupied three days, that learned judge gave judgment orally setting aside the writ on the ground that the action was an attempt to enforce the revenue laws of a foreign State; he later delivered written reasons examining in detail the arguments of counsel for the appellant and a number of authorities. His judgment was upheld by a unanimous judgment of the Court of Appeal the reasons for which were delivered by Sheppard J.A.”
    The 1995 USA Canada Tax treaty
    It also unofficially recognizes USA /CRA in Canada and depend on the courts to continue the revenue rule for Canadian citizens (at the time it occurred).
    B) Whereas FATCA has no cost for people who can not beat the system, the 1995 treaty has economic costs. If we had signed a European FATCA, it may have been easier to overturn FATCA but do you really want to take the risk.
    c) Based on the fact that the Liberal: signed the 1995 USA tax treaty, all major western democracies are signing FATCA, the damage to the economy if the USA imposed the 30% withholding and the Liberal Party has a lot of support from the Democratic party I would imagine they would have signed a worse FATCA agreement.
    D) I look at the various outcomes of court cases
    1) If the Supreme Court overrules FATCA and the USA does not impose, 30% withholding best solution.
    2) If the Supreme Court overrules FATCA and the USA imposes the 30% withholding, I would imagine any party in power would apply the non withholding clause. Our economy is just to dependent on the USA to do anything else. The Canadian Government at the time will not want millions of people to become unemployed and an increase in interest rates. Status quo
    3) If the Supreme Court overrules FATCA and the USA imposes the 30% withholding, The Liberals negotiate a European FATCA. This is the worse solution. They may than use the non withstanding clause if it is challenged.
    I do think the Liberal will win the next election. They have governed Canada for the vast majority of the last 90 years. Two elections is the longest the Conservatives have stayed in power.
    4) the Supreme Court does not overrule the FATCA. Status Quo
    If you are not able to beat the system you may get some letter from IRS. If you have been a Canadian citizen since 2006 you can ignore them. Do not cross the border. I feel like I have been the sole voice of the beat the system at Issac Brook and this website. I really do not want to spend a lot more time explaining this, I am tired deal with all the paranoid talk people who want to buy Gold and believe the USA dollar will not be the reserve currency and we are not heavily dependent on the USA .
    Regarding reserve currency even though Canada has a trade surplus with USA and our Federal debt and deficit is in much better shape than USA the Canadian/USA exchange rate has declined 10%.
    The Euro was supposed to be a reserve currency see how quickly the EU plus Swiss submitted to a terrible FATCA.
    It is also apparent that the Conservative government is encouraging people to beat the system. One example is that Government may accept your explanation why you relinquished. I believe that this is what Lynne would use this as an explanation. Another is that they are not using the USA definition that you have to complete all the USA exit taxes to be considered a non US person for tax reason.
    Of course I would imagine that anybody who has a USA person-hood and has not filled all the exit taxes including FBAR should not cross the border. Any Canadian government cannot do anything about US enforcing their stupid tax rules in USA.
    I was never a USA citizen and the short time I had the Green Card 35 years ago, I found that American were terribly arrogant. Is this also true about all the USA ex-pats?

    1. Correction from above it not USA/CRA it is USA CBA
      It also unofficially recognizes USA /CBA in Canada and depend on the courts to continue the revenue rule for Canadian citizens (at the time it occurred).

  18. @GeorgeIII  The lawyer has looked at many different issues from many different angles. I hope you and others can understand Stephen Kish and I are limited in what we are able to share.
    Twitter and Facebook are only two means by which people can sign in. It is their decision as to whether they wish to do that.  We added Twitter so that we can tweet directly from Maple Sandbox.

  19. Happy Easter everyone. If the Easter Bunny brings you a golden egg in your Easter basket, we hope you will be willing to share it with our legal challenge.
    Lynne Swanson (aka Blaze)

  20. correction non withstanding instead of non witholding
    2) If the Supreme Court overrules FATCA and the USA imposes the 30% withholding, I would imagine any party in power would apply the non with standing clause. Our economy is just to dependent on the USA to do anything else. The Canadian Government at the time will not want millions of people to become unemployed and an increase in interest rates. Status quo

  21. How the USA see the 1995 USA Canada Tax treaty
    *the tax treaties with the foreign nation does not facilitate collection (Canada is IRS friendly).”
    Now that only applies to non Canadian citizen at the time it occurred unless the Supreme Court of Canada reverses the revenue rule, In which case it will work against all Canadians. Extremely unlikely for Supreme Court to overrule.
    I still think that the current FATCA challenge should include the overturn of the 1995 USA Canad tax treaty. This treaty is a lot worse than FATCA.
    In addition it should be pointed out the 1995 Liberal government signed this treaty, while most other countries told USA to go to hell. The USA was not using a threat to destroy our export market unlike in FATCA. The Conservative at least got a lot better deal than Europe and they will change the deal if another country gets a better FATCA. I think Liberal supporter should admit that the Liberals would have signed a FATCA agreement. I doubt they would have gotten as good a deal as the Conservatives.
    Please note that Obama has put off the decision on Keystone until after the next US congressional election. So much for people who thought that was why Canadian government signed FATCA.
    The Canadian government signed FATCA because the imposition of 30% withholding would have had a disastrous effect on the Canadian economy.

  22. We would all be spared a whole lot of trouble and expense if enough Republicans are elected in November to repeal FATCA, as that party has resolved to do. Of course, we can all be pretty sure that Obama would veto any such thing passed in Congress.
    Watching Obama lose stature on the world stage with each passing day does not hurt our cause.
    @ Blaze……
    This is a human rights issue. Other plaintiffs in human rights litigation have managed to get the government to foot their bill. Why can’t we?

  23. @ GeorgeIII
    By the time the Keystone pipeline could be built, the Americans will probably be self sufficient in oil anyway. We should be thinking about the Chinese or other export markets.
    I think the United States is already a net exporter of energy (factoring in natural gas, coal, power, and oil). I read that their production went up by a million barrels a day last year and that they have surpassed Sodomy Arabia as the world’s number one producer. I predict they will be self sufficient in oil by the end of this decade and will not want our oil anyway. They have figured out a way to extract shale oil, and factoring in their shale oil deposits, they have more oil than the rest of the world put together.

  24. Artic
    Obama delayed Keystone decision till after the next election, because he did not want to piss off big labour (in favour) or big environmentalist.
    Obama is a real sleazeball.
    Keystone would be a small part of our overall export to USA. Most of our exports are hard to move commodities. The USA would want our heavy oil they can use their light oil for that purposes. We may export to China, if a BC pipeline is approved. Natural Gas exports to foreign land would involve liquefying the natural gas which is expensive and has some dangers involve.
    “The United States is by far Canada’s largest trading partner, with more than $1.7 billion CAD in trade per day in 2005. In 2009 73% of Canada’s exports went to the United States”

  25. US companies with operations in Canada do not send their profits back to USA because of tax laws(double taxation). This makes a Canadian hypothetical 30% withholding tax on USA $ transaction pretty weak.

  26. Dan Cayo in the Vancouver Sun seems to be aware there may be a constitutional challenge to FATCA.  But he thinks the IGA is An Offer Canada Can’t Refuse.
    Using a cross-border accountant as his only source, Cayo writes:

    If you think a policy requiring our government to give such personal information to a foreign taxman won’t withstand a Charter challenge, Dueck concedes you may be right. But if you think this would be a good thing, he disagrees.

    So, Mr. Dueck seems to thing we should simply surrender our Charter and other rights because a foreign bully says so.
    This article is a perfect example of lazy journalism.  Most of it seems to have been taken from Mr. Dueck’s own cross border tax blog. with no further research by the reporter.

  27. Don Cayo was the first reporter to break the news that CRA would not be collecting FBAR penalties from Canadians on behalf of the IRS. After his first article appeared in the Sun, a number of people (including myself) contacted him for the source of his information, as there was nothing on either the CRA or Finance website about this.
    Very soon thereafter, he wrote a follow up article which can be found on the right hand side of Sandbox under “Articles”.
    I suggest that he be provided with a different perspective. I’ll be contacting him. I hope others do as well.
    The refrain from accountants and tax lawyers who will make a bundle by scaring people into compliance is really disgusting.

  28. @ George III
    To characterize Obama as a sleazeball is an understatement. No US president in history has so egregiously attacked the sovereignty of our country and so many other countries.
    He is, in my mind, even a traitor to the United States. He has aligned himself with Sunni Muslim (muslim brotherhood types) in Syria, Egypt, and Libya. Those are the very people who did 9/11. I am quite convinced that he is himself a Sunni muslim.
    Obama does not only not give a damn about the rights of Canadian citizens. He is obviously allied with people who are marginalizing Jews on American campuses. There is not a peep out of him on this one.
    His coddlers in the media, including the CBC, give him a free pass on everything.

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