Canada could determine the fate of a controversial new US tax law FATCA

14 Mar

Canada’s preeminent constitutional legal expert could provide another ‘nail in the coffin’ for FATCA, a far-reaching and highly contentious new tax law that the US intends to impose on countries worldwide.


The Foreign Account Tax Compliance Act, or ‘FATCA’, which Washington is aiming to implement from 1st January 2014, will require every single financial institution in the world to report all their American clients’ financial activities directly to the US Internal Revenue Service (IRS).  Should financial institutions fail to comply with FATCA, they will suffer a 30 per cent withholding on every financial transaction of US origin.


The US Treasury claims FATCA is a vehicle to catch tax evaders but, in effect it will do very little to address the real concerns over tax evasion.

Instead, FATCA, in my opinion and in that of experts worldwide, is simply a form of US financial imperialism that will violate the laws of independent nations across the globe.

Recently, Peter Hogg, one of Canada’s highest profile constitutional experts has echoed this view and told the Canadian government that FATCA might violate the country’s Charter of Rights and Freedoms and, potentially other existing federal and provincial privacy laws.

In a detailed letter to Canada’s Finance Department, which is handling the negotiations with the US to have Canada sign an intergovernmental agreement (IGA) to force its financial institutions to become FATCA-compliant, Hogg wrote: “The procedures mandate by the model IGA are discriminatory in a way that would not withstand Charter scrutiny.”

These procedures effectively treat individuals differently, and adversely, based on an immutable personal characteristic, specifically citizenship.  If Parliament were to enact legislation authorizing and permitting this type of differential and adverse treatment, the legislation would contravene the equality protections in section 15 of the Charter.

There are approximately one million people in Canada who could be brought into America’s tax net under FATCA, meaning Canada is a critical country if the FATCA project is going to be at all effective for the US Treasury.

I am hopeful that the Canadian parliament will, ultimately, agree with the arguments set out in Hogg’s letter and move to reject FATCA.

Should this happen, I would imagine that the White House will look to repeal FATCA – especially as other economically and politically influential countries such as China are also likely to rebuff an IGA on FATCA because it contravenes their own laws.

Nigel Green deVere Group

Blog written 14th March




  1. If Canadian government sells out Canadian citizens on FATCA, many of us are prepared to come together to launch legal action to protect our rights as Canadian citizens and residents.

    A consultation with another leading constitutional lawyer took place almost a year ago. Groundwork is laid if either banks or the government tries to violate our fundamental rights.

    Join others in standing up to IRS bullies at

  2. How right you are @Blaze, but what a sore disappointment it would be to me should Canada acquiesce to the demands of the US. If home is where the heart is, I will then become homeless. The stakes are very high, not only for the loosely estimated 1M USP’s in Canada, but for their families and the future of America and the ability of their citizens to thrive throughout the world.

  3. I think it’s no coincidence as more and more banks put up “No US citizens allowed” signs, that the US renunciation rate has skyrocketed, more than triple in a few years.

    The real solution is to renounce US citizenship. It has no real benefits if you live outside the USA, it’s just a big chain that will drown you. Better to take it off now while the USA still allows renunciation (although it’s closing down on it, now you have to, like a dictatorship, pay a tax to renounce your citizenship despite that being against international law).

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