Canada: FATCA Court Challenge Fizzling? Maybe

We wrote last year FATCA Deal With the USA Getting Challenged in Court.

The Federal Court of Appeal heard the case and issued the following decision in a fairly lengthy judgement on September 16, 2015 in Hillis v. Canada (Attorney General) 2015 FC 1082:

“[1] On August 11, 2014, the plaintiffs filed a statement of claim seeking a declaration that the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act, being section 99 and Schedule 3 of the Economic Action Plan 2014 Act, No. 1, SC 2014, c 20 [IGA Implementation Act], and sections 263 to 269 of the Income Tax Act, RSC 1985, c 1 (5th Suppl) [ITA] – collectively, the “impugned provisions” – are ultra vires or inoperative because the impugned provisions are unconstitutional or otherwise unjustifiably infringe Charter rights [the constitutional issues].

[2] By the effect of section 3 of the IGA Implementation Act, the Agreement between the Government of Canada and the Government of the United States of America [US] set out in the schedule [Intergovernmental Agreement or IGA] of the IGA Implementation Act is approved and has the force of law in Canada during the period that the Intergovernmental Agreement, by its terms, is in force.

[3] On October 9, 2014, the plaintiffs filed an amended statement of claim adding non-constitutional arguments, which are examined and disposed of in the present judgment. This summary trial concerns the legality of the disclosure of the personal information of US persons (see paragraphs 17 and 27 below) collected for the year 2014 by Canadian financial institutions for the Canada Revenue Agency [CRA]. This information is scheduled to be disclosed on or around September 30, 2015 by the Minister of National Revenue [Minister] to the US tax authorities.”

The Court analyzes FATCA under the lenses of tax compliance and tax liability, taxpayers’ obligations under Canada and US tax laws, scope and effect of the impugned provisions, and the specific facts of the case.

The plaintiff’s arguments were rejected:

“[77] For all these reasons, the declaratory and injunctive relief requested by the plaintiffs in their motion for summary judgment shall be denied by the Court, 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 Charterrights. There shall be no costs. This is a case where, in view of the nature of the issues and the public interest involved in clarifying the scope of novel provisions affecting hundreds of thousands of Canadian citizens, no costs should be ordered against the losing parties.”

This last sentence leads us to believe that the case may be heard in the Supreme Court of Canada at a later date.

Hillis v. Canada (Attorney General) 2015 FC 1082

Robert Robillard, Ph.D., CPA, CGA, MBA, M.Sc. Econ.
Senior Partner, DRTP Consulting Inc.
514-742-8086; robertrobillard “at”

DRTP Consulting Inc. solutions go beyond transfer pricing and international tax solutions. The information in this blog post is general information only. Data and information come from sources believed to be reliable but complete accuracy cannot be guaranteed. DRTP Consulting Inc. or the author are not responsible or liable for any error, omission or inaccuracy in such information. The opinions expressed in this blogpost are those of the author. Readers should seek advice and counsel from DRTP Consulting Inc. as required.

Posted by drtp On 29 September 2015