Canadians Challenge US FATCA Scope

By Dex Tennyson, for 14 August, 2014

Two American-Canadian dual citizens living north of the border have filed a lawsuit in the Federal Court of Canada challenging the constitutionality of the country's involvement with the USA's Foreign Account Tax Compliance Act (FATCA).

Under the terms of FATCA, effective in Canada since last month, the Government of Canada will hand over private bank account information relating to US citizens and their families living in Canada to the US Internal Revenue Service.

The two plaintiffs are being supported by the Alliance for the Defence of Canadian Sovereignty. The lawsuit argues that FATCA violates provisions of the Canadian Charter of Rights and Freedoms, which guarantees life, liberty, and security of person; security against unreasonable search and seizure; and equal protection of law without discrimination. The complaint also suggests that FATCA goes against the principle "that Canada will not forfeit its sovereignty to a foreign state."

The pair have not lived in the USA since early childhood, and they never obtained a US passport or developed meaningful ties with the USA. One of them asked why she is being treated as a potential US tax evader merely because of her place of birth, stating: "This was not the Canada our brave Fathers of Confederation envisioned. FATCA destroys our unity and we cannot permit the loss of our sovereignty."

This lawsuit is accompanied by a separate submission to the United Nations, by concerned citizens worldwide, that the USA's "place of birth taxation," for which FATCA is an enforcement tool, violates fundamental human rights.

The latest statistics from the US Treasury Department show that a record 1,577 United States taxpayers gave up their passports or green cards in the first half of 2014.

Tags: Treaties | Foreign Account Tax Compliance Act (FATCA) | FATCA | Tax Treaties | Canada | United States | Compliance | Expats | Tax |


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