As a matter of background (and as discussed in a previous post), on August 11, 2014, the
plaintiffs, Hillis and Deegan, had filed a statement of claim in
Federal Court seeking a declaration that the Canada-United States Enhanced Tax Information
Exchange Agreement Implementation
Act (the IGA) as well as Sections
263 to 269 of the Income Tax Act(Canada)
(the Act) unjustifiably infringed the Canadian Charter of Rights and
Freedoms and are therefore unconstitutional (the
"constitutional issues"). Thereafter, on October 9,
2014, the plaintiffs filed an amended statement of claim adding
non-constitutional arguments, questioning the legality of the
disclosure of personal information of US persons residing in Canada
and collected in respect of the 2014 calendar year by Canadian
financial institutions for the Canada Revenue Agency, which
information is scheduled to be disclosed on or about September 30,
2015 by the Minister of National Revenue (the Minister) to
the US tax authorities (the non-constitutional issues).
Specifically, the plaintiff sought a general declaration and
a permanent prohibitive injunction preventing the collection and
disclosure of taxpayer information to the US tax authorities by the
Minister on the basis that its disclosure is inconsistent with the
Canada –United States Income Tax Treaty and in
violation of section 241 of the Act which places limits on the
ability of the Minster to disclosure confidential information.
It was these non-constitutional issues that was the object of
Justice Martineau's decision and not the constitutional
In his findings, Justice Martineau concluded that the collection
and automatic disclosure of account holder information about US
reportable accounts has been legally authorized in Canada by
the provisions of the IGA and that the collection and automatic
disclosure of such information is not inconsistent with the
provisions of the Canada –United States Income Tax Treaty,
nor does it violate section 241 of the Act.
He did hold however, that while "the declaratory and
injunctive relief requested by the plaintiffs in their motion for
summary judgment shall be denied by the Court, [it shall be]
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."
On to round two.
Postscript : IRS Notice 2015-66
The IRS has since issued a notice confirming that the
FATCA implementation date can be extended to September 30,
Specifically, Notice 2015-66 provides that a foreign (non-U.S.)
financial instruction (FFI) in a Model 1A treaty country
(this would include Canada) will be treated as FATCA compliant, and
not subject to withholding, so long as the partner jurisdiction
notifies the U.S. before September 30 that it requires more time,
and "provides assurance that the jurisdiction is making good
faith efforts to exchange the information as soon as
possible." Notice 2015-66 does not, however, change the
deadline for FFIs to report information to their local tax
authority, which remains governed by law of that country."
We await Canada's Minister of National Revenue's
reaction to this development.
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