From The Desk of John Richardson: Co-chair ADCS-ADSC.ca – Amendments to Statement of Claim

October 9, 2014

UPDATE 20 NOVEMBER 2014

Here is a brief response of the Plaintiffs to the Government’s statement of Defence:

2014 11 20 Reply

This is the Gov of Canada’s Statement of Defence to the Amended Claim:

2014 11 10 – Statement of Defence (AGC)

Greetings:

This post is a continuation of our efforts to keep you apprised of developments in our “FATCA Lawsuit” against the Government of Canada. When we have significant developments to report, we will report them here.

We have two developments to report:

1. As you know the initial Statement of Claim was based on allegations that the FATCA IGA and the enabling legislation violate various provisions of Canada’s Constitution including  Canada’s Charter of Rights and Freedoms. The claim has been amended to include the allegation that the FATCA IGA and enabling legislation are in violation of both the Income Tax Act of Canada AND the Canada U.S. Tax Treaty.

These amendments mean that our claim can be successful without demonstrating a violation of the Charter of Rights.

2. In order to facilitate the amendments described above, Canada’s Minister of National Revenue has been added as a defendant.

We have followed  this announcement with an appropriate press release.

For those interested in reading the amended Statement of Claim – the amendments are underlined:

[Hillis] Filed Amended Statement of Claim to the Defendants

For those interested in reading the press release of October 9, 2014:

ADCS_PrR_OCT9_2014

But, life is about much more than FATCA and legal challenges ….

Since this coming weekend is “Thanksgiving Weekend” in Canada and “Columbus Day Weekend” in the U.S.:

I wish you and your families a Happy (and safe) Thanksgiving and/or Columbus Day.

John Richardson

P.S. As I said in my message of September 29, this lawsuit is a “long term” project. We are very grateful for and continue to need (in no particular order): your patience, your support and your funding wherever in the world you may live!

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22 comments on “From The Desk of John Richardson: Co-chair ADCS-ADSC.ca – Amendments to Statement of Claim
  1. John Smith says:

    Awesome work.

    Liked by 3 people

  2. EmBee says:

    This all sounds very good and Happy Thanksgiving to you too, John. My same good wishes extend to the entire ADCS-ADSC team.

    Liked by 3 people

  3. David Ash says:

    @EmBee and @JohnRichardson

    Great to hear! Thanks for posting the amended Statement of Claim. It is great to have a “fallback position” so that we can show a violation of the Income Tax Act of Canada and/or the Canada-U.S. Tax Treaty barring us showing a violation of the Charter.

    However, to my non-legal mind, success regarding the Charter claim seems like a far bigger win–because the Charter is not nearly so easily changed by the Canadian government of the day just because they have a majority government.

    Liked by 2 people

  4. […] From the Desk of John Richardson, ADCS-ADSC Amendments to Statement of Claim provides an explanation of the changes and a link to the amended Statement. […]

    Like

  5. Thanks for opening up another avenue for success and I thank everyone at ADCS for the work that they have done on this claim.

    Happy Thanksgiving to the ADCS members.

    Liked by 1 person

  6. JC says:

    Curious about the inclusion of the Tax Treaty. It is about the part that the CRA will not collect IRS tax debts? Perhaps in relation to the 30% of accounts of recalcitrants. Or, something else that may apply to all tax treaties?

    Like

  7. […] Vancouver Constitutional Litigator Joseph Arvay on 11 August 2014 in Canada Federal Court. See the NEW CLAIMS in which we sue the Minister of National Revenue in addition to the Attorney General. See also the new Press […]

    Like

  8. JC says:

    Feeling behind on my masters in international tax law, but perhaps answering my own question about the tax treaty. The Claim now says that the information exchange should be in accordance with the Canadian-US Tax Treaty, that the IGA is ultra vires of the tax treaty provisions on information exchange. The tax treaty was formally ratified by both countries while the IGA was not formally ratified by the US Senate. So either the tax treaty trumps the IGA, or the tax treaty must be modified for the IGA/FATCA to be legal from the Canadian AND US side. Either way extra trouble for the IGA in Canada, AND around the world. Seems obvious. Of course the US will still try to bluff that it is all legal. In comes ADCS the more funded the better. What parts of the argument are missing here?

    Canadian-US Tax Treaty: From Article XXVII
    Exchange of Information

    3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

    [It appears that the IGA runs afowl of each of these]

    (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; [variance with charter, variance in that US banks don’t provide FATCA information to Canada (don’t even ask the questions to get reciprocal information)]

    (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; or [account reporting only for a single nationality (US) not normal administration for Canada]

    (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public). [ disclose all sorts of private business account information] [For Australia, the privacy laws were amended for FATCA for exception in case of international treaty, yet does IGA meet this “treaty” definition?]

    Any more refinement on the IGAs of the world in violation of the tax treaties of the world?

    Like

  9. nervousinvestor says:

    I am a little concerned that the amended complaint refers too frequently to persons while they are “citizens” of Canada …. are not Landed Immigrants, Political Asylum seekers and other permanent residents (legal or otherwise?) of Canada similarly protected by our Charter of Rights. Am I off base?

    Like

  10. calgary411 says:

    I’m posting a comment from nervousinvestor from the IsaacBrockSociety.ca blog as nervouseinvestor says he has tried to comment here twice but it didn’t work. So, from nervousinvestor: http://isaacbrocksociety.ca/2014/06/01/its-time/comment-page-82/#comment-3357966

    @calgary411 – I am a little concerned that the amended complaint refers too frequently to persons while they are “citizens” of Canada …. are not Landed Immigrants, Political Asylum seekers and other permanent residents (legal or otherwise?) of Canada similarly protected by our Charter of Rights. Am I off base?

    Like

    • David Ash says:

      @nervousinvestor My understanding is that the NEW claims are not related to the Charter–although the existing claims which still are being pursued to related to the Charter. The new claims refer to Canadian citizens because the existing US-Canada Income Tax Treaty does, in fact, convey certain rights to Canadian citizens that permanent residents, political asylum seekers, and unlawful residents do not enjoy. See the following quote: “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…” from the Treaty (http://www.irs.gov/pub/irs-trty/canada.pdf). My only minor concern–that I assume Arvay and Gruber will address–is that the amended claims now make the plaintiffs’ Canadian citizenship a material fact. In describing the plaintiffs, no mention is made as to whether the plaintiffs are Canadian citizens or not.

      Like

  11. noone says:

    John wrote: “this lawsuit is a “long term” project.”
    For those of us layman, when can we expect a judge to hear the case and the case to start being debated in court? Why does it take so long to have a first hearing?

    Like

    • David Ash says:

      I’m a layman also but I would expect (someone correct me if I’m mistaken) that the addition of a new defendant and new claims on Oct 9 mean that we are essentially back at the beginning. The government would have 30 days (plus whatever reasonable extensions are agreed to) to respond. At some point after that a hearing would be scheduled. I think the question I’d have would be whether, at this point, we have the “final” set of plaintiffs, defendants, and claims–and the lawsuit is ready to begin in earnest.

      Like

  12. David Ash says:

    Quick question if anyone knows: I assume that this will “reset the shot clock”, so to speak, for both MNR and AGC so they now have a fresh 30 days in which to respond. That now puts the deadline slightly beyond the US election. Will this timing affect things in any way?

    Like

  13. JC says:

    GATCA, would the Tax Treaty (all the Canadian tax treaties) need to be modified in the provisions of information exchange to accommodate GATCA?

    Like

  14. JC says:

    @Calgary411. Significant developments here. Why not an Isaac Brock Society feature on this?

    Like

  15. calgary411 says:

    JC, it was decided to try to keep the discussion dedicated to one place here at the ADCS WP blog rather than have this status discussion lost within so many different topics at Brock.

    I’ll leave it to of ADCS to answer questions that have been placed here — and thanks for that!

    Like

  16. JC says:

    There are some harmonious (to my ear) new words in the amendment. Not just about taxation, but “requirements connected therewith.” aka US tax compliance, and I’ll add “burden.” Far excessive, and should be considered a tax in its own right or at least the extent to which it is extremely taxing in time, resources, and stress, and under threat of financial bankruptcy (FBAR, 8938 penalties) if not done right.

    “Requirements connected therewith” could also include the nasty side of compliance that neutralises and penalises any benefit to Canadian tax deferred retirement, education, and disability funds – or any other impact on normal Canadian person financial planning and estate planning.

    Sounds like an assault on CBT.

    Like

  17. jigglypuff says:

    I have to wonder about this lawsuit. Just saying…its not likely to make the US repeal FATCA, so a ‘win’ in this suit would what? Nullify the Canadian IGA? Wouldnt that strip us of the benefits of the IGA and then force banks to report every piddley little thing they see to the IRS?
    Dont get me wrong, I’m a big fan of the Isaac Brock Society’s work with regards to FATCA (in fact I just renounced today). I just question what the possible benefit to Canadian dual citizens would be if this case is won. I really doubt a win would mean that Canada gets out of FATCA.

    Like

    • David Ash says:

      @jigglypuff I’m not a lawyer but first off there is supposed to be a parallel action taking place in the USA–www.fatcalegalaction.com–so repeal on the US side IS theoretically a possibility. That said, I’m a donor to both efforts. Despite a small speed bump last month, I’ve mostly been happy with the ADCS effort. I’m less happy with the http://www.fatcalegalaction.com effort–where the focus seems to be in using FATCA for political leverage in the US midterm elections rather than actually starting legal action. However I’m willing to be proven wrong if http://www.fatcalegalaction.com does get moving soon.

      So what would happen if there were a win in the Canadian lawsuit but no action on the US side? Again, I’m not a lawyer but it seems to me that all transfers of funds from the US to Canada would then be subject to a 30% withholding tax. This would force the Canadian government to finally grow a pair and introduce a reciprocal tax in the opposite direction. The business community would, then, I believe step in and pressure the governments on both sides to renegotiate an agreement that offers something for both sides and that is consistent with the Canadian court ruling.

      The hope is that before things got to that point that politicians in both countries will realize that FATCA isn’t sustainable and will negotiate an agreement before a major shock to both economies occur.

      There are so many variables here–what intermediate steps the courts may take, what happens with the US court action, elections in both countries, possible lawsuits in other countries–that this is all mere speculation. Even if a lawyer were answering, and not a lawman like me, I think it would be mostly speculation.

      Like

      • David Ash says:

        Oops minor typo but it significantly changes the meaning: I meant ‘layman’ not ‘lawman’ near the end of this message. Perhaps the mods can correct this if they approve the message. Thx 🙂

        Like

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