Article 26A


Hillis v. Canada (Attorney General), 2015 FC 1082

Art. 26 of US Convention did not prohibit FATCA information exchanges

One of the challenges brought by the appellant to the Canadian FATCA legislation (i.e., the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act and ss. 263 to 269 of the Income Tax Act) was that "to the extent that Canada's disclosure of account holder information to the US constitutes 'assistance in collection,' Canada is prohibited [by Art. XXVI A of the Canada-U.S. Convention] from disclosing such information as it relates to Canadian citizens…[so that] account holder information should not be disclosed in cases in which the taxpayer was a Canadian citizen at the time the revenue claim arose" (para. 58). In rejecting this submission and before dismissing the motion, Martineau J stated (at para. 72):

Article XXVI A applies only to cases in which tax liability has been determined and is enforceable, and does not apply to the assessment of tax payable, the verification of taxpayer compliance, or related exchanges of information.

See summary under Treaties – Art. 27.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. regard to object rather than political statements 55
Tax Topics - Treaties - Income Tax Conventions - Article 25 FATCA requirements were reciprocal and were primarily imposed on financial institutions 182
Tax Topics - Treaties - Income Tax Conventions - Article 27 FATCA information exchanged automatically irrespective of any substantive U.S. tax liability was "relevant" to U.S. tax administration 387

Chua v. MNR, 2000 DTC 6527 (FCTD)

see also 2001 DTC 5104 (FCTD)

Article XXVI A of the Canada-U.S. Convention was contrary to section 15 of the Charter in light of the citizenship preference contained in paragraph 8 of Article XXVI A.

See Also

Retfalvi v. USA (2019), No. 18-2158 (U.S.C.A., 4th Circuit)

Art. 26A of the Canada-U.S. Treaty was constitutionally valid

The appellant (Retfalvi) became a U.S. citizen in 2010 and also was reassessed in 2010 by CRA respecting gains on two Canadian condo sales reported by him in his 2006 Canadian income tax return. He did not appeal a notice of confirmation received by him in 2011, so that his reassessed liability became final at that time.

In 2015, the IRS made a demand of Retfalvi for the payment of approximately U.S.$124K pursuant to a request made by CRA of the IRS pursuant to Art. 26A of the Canada-U.S. Convention. Retfalvi paid this amount in 2016, but filed a refund claim with the IRA, which was denied, and brought a refund suit. The counts advanced by him included that Art. 26A violates the Constitution’s Origination Clause, as a revenue raising measure that did not originate in the House of Representatives. In rejecting this argument, Judge Hollander stated (at pp. 13-14):

Plainly put, the phrase “bills for raising Revenue” refers to bills that impose taxes for the general support of the federal government and not the administration of taxes. Article 26A does not levy taxes. …

We agree with the government that Article 26A merely facilitates collection of an already existing debt. …

In also rejecting Retfalvi’s submission that Art. 26A required House-originated implementing legislation, and before dismissing his appeal, she stated (at p. 17):

Article 26A relies on each country’s existing tax laws and procedures for assessment and collection. And, it requires no additional legislation to operate effectively. Further, there is no claim that implementing language is required by the text of Article 26A, nor that such language was required by the Senate when it ratified Protocol 3. As discussed, Article 26A is not subject to the Origination Clause. Nor does it infringe upon an exclusive congressional power. It follows that it does not require implementing language.

Ben Nevis (Holdings) Ltd. v. Revenue and Customs Commissioners, [2013] BTC 485, [2013] EWCA Civ 578

new tax collection Article applied to old tax debts

The most recent Income Tax Convention between the U.K. and South Africa had entered into force on 17 December 2002, and a Protocol providing for mutual collection assistance (through the addition of Article 25A) was subsequently entered into "in respect of requests for assistance made on or after the date of entry into force of this Protocol" of 13 October 2011. After obtaining judgment against a South African resident (Nevis) on 4 March 2011 for Rand 2.6 billion of unpaid taxes for 1998 to 2000, the South African Revenue Service (SARS) (subsequently to 13 October 2011) requested the respondent (HMRC) for collection assistance. In rejecting the taxpayer's submission that Article 25A did not apply to the collection of tax debts arising prior to the coming into force of the 2002 Convention, Lloyd Jones LJ stated (at para. 23):

"Taxes" in Article 25A(2) does not need to be limited by reference to the date of their accrual. Article 25A has no bearing on liability to tax and is merely concerned with proceedings for enforcement. Whereas provisions which modify tax changes need to be linked to the relevant tax period so as to ensure a smooth transition from the existing rules to the new rules, there is no need to make similar provision for administrative provisions such as Article 25A which may, without difficulty, be brought into effect as soon as the Protocol comes into effect.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Retroactivity/Retrospectivity creation of new collection right did not entail retrospectivity 182
Tax Topics - Treaties - Income Tax Conventions Vienna convention approach applies to non-signatories 207
Tax Topics - Statutory Interpretation - Revenue Rule 124

Administrative Policy

25 July 2012 External T.I. 2011-0427221E5 - FBAR penalties

FBAR penalties not taxes

Penalties that the US collects for failure to report Foreign Bank and Financial Accounts information under form TD F90-22.1 ("FBAR penalties") are not a "revenue claim," and CRA will therefore not assist in collecting such penalties. An FBAR penalty is imposed under the U.S. Bank Secrecy Act, and is therefore not a penalty in respect of US taxes owing.


Wolfe D. Goodman, "When can the CCRA enforce a U.S. tax liability under Article XXVI-A of the Convention?", Goodman on Estate Planning, Vol. IX, no. 3, p. 716.