Federal court rules in favour of information exchange program between Canada & the US
A federal court judge in the US has not allowed the postponement of a transnational agreement allowing the Canadian government to exchange information regarding approximately 1,000,000 US citizens living in Canada, for taxation purposes.
Opponents of the program argue that, even though they may reside in Canada, they have otherwise no ties to the US and therefore any financial information shouldn’t have to be sent to the Internal Revenue Service in the US.
Following the launch of the agreement, two citizens that have challenged its validity, resorted to the Federal Court of Canada, suggesting that such agreement is in violation of their rights and freedom. Judge Luc Martineau had a different opinion on the issue:
“The collection and automatic disclosure of personal and account information from Canadian financial institutions is legally authorised and is not inconsistent with a tax treaty between Canada and the US”.
The Judge has additionally denied the “declaratory and injunctive relief” requested by the plaintiffs to stop the initial transfer of information. But he wrote that he did so “without prejudice to their right to pursue their claim” further.
Canada has created this information-exchange program with the US, in order for the Canadian financial institutions to comply with disclosure requirements under a new U.S. law called the Foreign Account Tax Compliance Act (FATCA), while remaining compliant with the sovereign privacy laws.
Court records state that the first exchange of information of this agreement is to take place on the 23rd of September.
Image: The Federal Court of Canada
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