Newspaper article The Canadian Press

Ontario Women Sue Ottawa over Compliance with New U.S. Banking Law

Newspaper article The Canadian Press

Ontario Women Sue Ottawa over Compliance with New U.S. Banking Law

Article excerpt

Ottawa sued over compliance with U.S. law

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TORONTO - Canada has violated the charter rights of nearly a million Canadians by agreeing to share their financial details with authorities in the United States, two Ontario women allege in a new lawsuit.

Gwen Deegan of Toronto and Ginny Hillis of Windsor, Ont., have launched a claim against the Attorney General of Canada.

In it, they accuse Ottawa of breaching the Constitution by complying with a sweeping new American tax fraud law, known as the Foreign Account Tax Compliance Act.

Under the terms of the legislation that took effect last month, banks must share all personal and joint account details of anyone deemed to be a "U.S. person." This includes American citizens and people born in the U.S., even those with no existing ties to the country.

The U.S. claims that more than 77,000 financial institutions around the world have agreed to co-operate with the law.

In Canada, financial institutions must share relevant account holder details, including personal details and financial balances, with the Canada Revenue Agency. The CRA will in turn pass that information along to the U.S. Internal Revenue Service.

Hillis and Deegan, both of whom were born in the U.S. but have lived in Canada since the age of five, claim Canada is exposing them and others in similar circumstances to unfair tax penalties and privacy violations by complying with the U.S. government's demands.

"I don't believe that my rights as a Canadian citizen should be abrogated by my government," Hillis said in an interview from Windsor. "I don't believe my government should be breaching our sovereignty rights as a nation ... We are a sovereign nation, we are not the 51st state of the United States."

Hillis, a retired lawyer who holds Canadian citizenship, said those who resist the new regulations could be branded as official tax cheats by the U.S. government.

Failure to comply with the laws, she said, could result in stiff financial penalties or even jail time.

A large number of Canadians are impacted by the law, she said, since FATCA's definition of a "U.S. person" is extremely broad and applies even to those who do not hold an American passport and have never worked in the country. …

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