Tax - Income Tax - Administration and Enforcement
United States, which taxed citizens on worldwide income regardless of residence, enacted Foreign Account Tax Compliance Act (FATCA) to, among other things, require non-American financial institutions to directly report account information for customers who might be “U.S. persons”. Canada entered into intergovernmental agreement (IGA) with U.S., implemented by Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act, under which CRA acted as intermediary between Canadian financial institutions and Internal Revenue Service. Plaintiffs brought action to challenge constitutionality of Act, alleging that CRA’s collection and provision of such account information to IRS breached s. 8 and s. 15 of Canadian Charter of Rights and Freedoms . Action dismissed. Defendants’ objection to plaintiffs’ standing was not timely and, although plaintiffs had not yet been directly affected by sharing of their information with IRS, it was appropriate to grant public interest standing at least to plaintiff D. While Act did allow for seizure of account information in which those affected likely had subjective expectation of privacy, such seizure was reasonable in light of limited privacy interest and minimally intrusive method used to collect information. Benefit that would accrue to U.S. persons in Canada by their ability to ignore their obligations under American tax laws, which was not kind of interest that Charter was intended to foster, was outweighed by need to protect Canada as whole from economic consequences of FATCA Seizures were reasonable and did not breach s. 8 of Charter. While distinction was drawn by Act based on enumerated and analogous grounds of national origin and U.S. citizenship, it was not discriminatory and did not breach s. 15 of Act as its effect was to compel U.S. persons to comply with their pre-existing obligations under American tax laws.
Deegan v. Canada (Attorney General) (2019), 2019 CarswellNat 3474, 2019 CarswellNat 3475, 2019 FC 960, 2019 CF 960, Anne L. Mactavish J. (F.C.).
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