OTTAWA — A Canada-U.S. deal allowing Canadian financial institutions to send customer information to U.S. authorities to help find tax cheats does not violate the Charter of Rights and Freedoms, a judge has ruled.
Federal Court of Canada Justice Anne Mactavish dismissed an appeal from two American citizens, Gwendolyn Louise Deegan and Kazia Highton, who now live in Canada and have no real ongoing connection with the United States.
The U.S. Foreign Account Tax Compliance Act, or FATCA, requires banks and other institutions in countries outside the United States to report information about accounts held by U.S. individuals, including Canadians with dual citizenship.
Deegan and Highton challenged the constitutionality of Canadian provisions implementing a 2014 agreement between the countries that makes the information-sharing possible.
They argued the provisions breach charter guarantees that prevent unreasonable seizure and ensure the equality of people under law.
Mactavish concluded in her decision released Monday that although the provisions do result in the seizure of the banking information of Americans in Canada, the affected people have only “a limited expectation of privacy” in their data.
She also ruled that the provisions do not violate the charter guarantee that every person is equal under the law without discrimination based on national origin.
Under the tax arrangements, Canadian financial institutions are legally required to provide the Canada Revenue Agency with data concerning accounts belonging to customers whose information suggests they might have American citizenship. The revenue agency then hands the information to the U.S. Internal Revenue Service.
Nearly all countries levy income taxes based on residency, while the U.S. system is based on citizenship.
The U.S. considers all American citizens to be permanent tax residents in the United States for federal income-tax purposes, taxing the worldwide income of “specified U.S. persons” regardless of whether they live, work, or earn income in the United States.
“The result of this is that every Canadian resident who is an American citizen is subject to U.S. federal taxation on all of their income from all sources, wherever that income may be derived, even if he or she is also a Canadian citizen,” Mactavish says in her decision.
“Canada clearly found itself in an extremely difficult position as a result of the enactment of FATCA by the American government.”
U.S. law requires extensive financial and asset reporting, with the threat of significant penalties for failure to meet the obligations.
However, Mactavish notes, the U.S. government estimates that fewer than 10 per cent of all people who file American tax returns from outside the United States ultimately owe any taxes to Washington.
In addition, a tax treaty between Canada and the United States allows residents of Canada to receive credit for some taxes paid to the federal and provincial governments that would otherwise have been owed to the U.S. revenue service.
Deegan and Highton unsuccessfully argued the provisions require Canadian banks to transfer the information of potentially hundreds of thousands of people annually to the federal revenue agency in Ottawa without judicial authorization or any state oversight.
They said this amounts to “a massive fishing expedition and a seizure that offends every core precept of the citizenry’s … right to a reasonable expectation of privacy.”
Mactavish pointed out that the Supreme Court of Canada has found that taxpayers’ privacy interest in records that may be relevant to the filing of income-tax returns is “relatively low.”
The method used to collect this information is “minimally intrusive” and the data shared with the U.S. revenue service is afforded protection under the tax treaty between the two countries, she added.
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Jim Bronskill , The Canadian Press
Huawei executive’s defence team alleges Canadians were ‘agents’ of the FBI
VANCOUVER — A defence team for a Chinese telecom executive is alleging Canadian officials acted as “agents” of American law enforcement while she was detained at Vancouver’s airport for three hours ahead of her arrest.
In court documents released this week, defence lawyers for Huawei chief financial officer Meng Wanzhou point to handwritten notes by Canadian officers indicating Meng’s electronics were collected in anticipation of a request from the Federal Bureau of Investigation in the United States.
The notes show the RCMP asked the FBI if the U.S. was interested in Meng’s luggage and that a Canada Border Services Agency officer wrote down Meng’s passcodes, while another questioned her about Huawei’s alleged business in Iran.
This happened before she was informed of her arrest, the defence says.
“The RCMP and/or CBSA were acting as agents of the FBI for the purpose of obtaining and preserving evidence,” alleges a memorandum of fact and law filed by the defence.
“The question that remains is to what extent and how the FBI were involved in this scheme.”
The materials collected by the defence were released ahead of an eight-day hearing scheduled for September, in which the defence is expected to argue for access to more documentation ahead of Meng’s extradition trial.
The Attorney General of Canada has yet to file a response and none of the allegations have been tested in court.
Meng’s arrest at Vancouver airport has sparked a diplomatic crisis between Canada and China and drawn international scrutiny of Canadian extradition laws.
She was arrested at the behest of the U.S., which is seeking her extradition on fraud charges in violation of sanctions with Iran.
Both Meng and Huawei have denied any wrongdoing. Meng is free on bail and is living in one of her multimillion-dollar homes in Vancouver.
The RCMP and CBSA did not immediately respond to requests for comment on the documents but have said in a response to a civil claim that border officials only examined Meng and her luggage for immigration and customs purposes.
Meng extradition trial won’t begin until Jan. 20, but the court documents shed light on her defence team’s planned arguments that her arrest was unlawful and for the benefit of the United States.
“These are allegations of a purposeful violation of a court order and the abuse of important Canadian legal norms for improper purposes, namely, to further the objectives of the requesting state,” the defence says.
They plan to argue that the U.S. committed an abuse of process by using the extradition proceedings for political and economic gain. Parts of the defence are comments by U.S. President Donald Trump that he would intervene in Meng’s case “if necessary.”
The seizure of electronics and questioning of Meng by border officials in Canada also follows a pattern of how Huawei employees have been treated at U.S. ports of entry.
“This targeting has included the apparent abuse of customs and immigration powers to search and question Huawei employees at various U.S. ports of entry,” the documents say.
The defence accuses officers of intentionally poor note keeping that obscures what exactly happened, including why the arrest plan apparently changed.
The documents suggest that Canadian officials initially planned to arrest Meng “immediately” after she landed, by boarding the plane before she got off. Instead, three CBSA officers immediately detained Meng when she disembarked the plane while two RCMP officers stood nearby and watched, despite their knowledge of the warrant calling for her “immediate” arrest, the defence says.
The defence argues spotty notes kept by the CBSA officers constitute a “strategic omission.”
“When assessed together, a clear pattern emerges from these materials: the CBSA and the RCMP have strategically drafted these documents to subvert the applicant’s ability to learn the truth regarding her detention,” the defence says.
Amy Smart, The Canadian Press
Three confirmed dead in fiery Alberta crash with semi trucks, passenger vehicles
CEREAL, Alta. — A Saskatchewan man says a well-timed pit stop may have helped him avoid getting caught in a fiery 10-vehicle crash in southeastern Alberta that killed three people.
Dore Germo and his wife left Kelowna, B.C., on Monday after a holiday visiting friends and, after a night in Calgary, were on their way home to Warman, Sask., on Tuesday.
They stopped for gas and a break in Hanna, Alta., about 80 kilometres from where seven passenger vehicles and three semi trucks collided on Highway 9.
The couple could see smoke as they continued east, but they thought it was just a grass fire.
Then they saw flashing lights and heard sirens and a police officer was running down the middle of the road yelling, “Get out!”
Germo says they were directed to a rural side road to get around the crash, and from there they could make out a tanker truck and burned vehicles amid the smoke.
“It was quite a sickening kind of empty feeling once you realized that — yes — those are people just going about their day and travelling somewhere,” Germo said in an interview Wednesday.
“It kind of looked like a bomb had gone off because there were these burnt out vehicles and it was very eerie.”
He said he’s praying for those involved.
“The first thing you think of is those poor families.”
RCMP confirmed Wednesday that three people were found dead at the scene of the crash between the small communities of Chinook and Cereal, about 300 kilometres east of Calgary. Ten people were injured, two critically.
One of the semi trucks that was carrying fuel ignited, causing several vehicles to catch fire, and another truck was carrying butane.
A stretch of Highway 9 was expected to remain closed until about mid-day, while crews clear the collision area and recover dangerous goods in one of the trucks.
The RCMP’s victim services unit is providing support to people involved in the crash.
“The investigation into this collision remains a lengthy process given the nature of the crash scene,” RCMP said in Wednesday’s release. “It is anticipated that it will take several weeks for the collision analyst to complete the investigation.”
— By Lauren Krugel in Calgary
The Canadian Press
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