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w w w . C A N A D I A N L a w y e r m a g . c o m J A N U A R Y 2 0 1 6 49 measures were compliant with the tax treaty and the information could be turned over. In the U.S., these types of intergovernmental agreements are considered by its Treasury Department as interpretations of treaty terms. Mar- tineau ruled that the "ambiguous" legal status of the agreements in the U.S. was not relevant to what he had to decide. The measures were enacted by Parlia- ment and at a minimum, constituted "a binding agreement between the U.S. and Canada respecting the interpreta- tion or application of the Canada-U.S. Tax Treaty," wrote Martineau. Allison Christians, a professor at McGill University and the H. Heward Stikeman chair in tax law, describes the agreement as a "legal morass" and not a proper legal instrument. "This is an override of a treaty," says Christians, who was an expert witness for the plaintiffs. The reporting provisions "are sup- posed to help go after the bad guys, but it will capture a lot of innocent bystand- ers," she says. As well, the federal gov- ernment has entered into an agree- ment "that overrides Canadian law in a number of respects, including privacy obligations." Berg agrees that FATCA "hits very hard. It is collateral to its intended pur- pose." But on the legal issues before it in the summary trial, "the Federal Court correctly decided those treaty points," he says. If the court had accepted the arguments of the plaintiffs, "there would have been bigger consequences. It would have impacted all of Canada's treaties." For now, an appeal of the decision related to the tax treaty is on hold, as the plaintiffs move ahead with a Char- ter challenge to the new provisions. A full trial in Federal Court will hope- fully take place before the deadline in September to turn over more account information, says Gruber. The next round in the legal proceed- ing is expected to focus on whether the reporting measures breach s. 15(1), the equal protection section of the Charter of Rights and Freedoms. A preview of what may be argued was made public previously by the Green Party when it obtained, through a freedom of informa- tion request, an opinion letter written in late 2012 by constitutional law expert Peter Hogg to the Department of Finance. Hogg suggested the turning over of this information might not be Charter com- pliant and could be found to be "grossly disproportionate" to the objective. "Cana- da is not a tax haven," wrote Hogg. While in opposition, a number of Lib- eral MPs were critical of the agreement reached by the government of Stephen Harper. Gruber says a Liberal govern- ment could easily end the controversy. "They could negotiate a new protocol that over-rides the agreement," he says. A spokesperson for the Finance Department said in a statement that "the exchange of information between tax authorities is an important tool for com- bating tax evasion and for promoting compliance." The spokesperson added that the department "is not in a position to speculate on possible policy actions that may be taken in the future" by the government. Two decades ago, a leading Canadian lawyers magazine called Millar Kreklewetz LLP a Super Boutique, describing us a Not much has changed. We are proud to be recognized as a Canadian Lawyer Top 5 Tax Boutique, on the strength of our GST/HST and indirect tax practice! 24 Duncan Street, 3 rd Fl, Toronto, Ontario, M5V 2B8 W. Jack Millar wjm@taxandtradelaw.com Tel: (416) 864 - 6200 Fax: (416) 864 - 6201 www.taxandtradelaw.com Robert G. Kreklewetz rgk@taxandtradelaw.com Helping You. Help Your Clients. ® "brand name for commodity tax and related international trade work". MillarKreklewetz_CL_Jan_15.indd 1 2014-12-09 1:59 PM

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