Article 27


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

FATCA information exchanged automatically irrespective of any substantive U.S. tax liability was "relevant" to U.S. tax administration

Ginny Hillis, who was born in the U.S. to Canadian-citizen parents and came to Canada when she was five, brought an action for a declaration that the Canadian FATCA legislation (i.e., the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act (enacting an intergovernaental agreement) and ss. 263 to 269 of the Income Tax Act) was void as unconstitutional and that the disclosure of taxpayer information under such legislation should be restricted rather than automatic in light of the provisions of the Canada U.S. Income Tax Convention (the "Convention") and s. 241 of the ITA. A summary trial was held dealing only with the latter non-constitutional petition. Before dismissing the motion, Martineau J rejected a submissions that "the account holder information collected by the reporting institutions on US persons… must… be shown to 'be relevant' for carrying out the provisions of the [Convention]…[as] the ‘may be relevant' test mentioned in Article XXVII of the [Convention] must be satisfied on a case by case basis" (para. 59) and, in particular, "since most US persons resident in Canada do not owe taxes to the US…their account holder information is of no relevance… and therefore does not fall within the scope of information that may be disclosed pursuant to Article XXVII" (para. 60), stating (at paras. 70-71) that:

It is…unreasonable to conclude that the governments of Canada and the US entered into an Intergovernmental Agreement which should be interpreted in a way that renders it practically impossible to perform.

…[T]he FATCA reporting requirements are similar in principle to certain Canadian reporting requirements …[f]or example, section 233.3… .

Before so concluding, he noted (at para. 55) that the Crown took the position before him "that the IRS cannot use such [FATCA] information to administer non-tax laws (such as the US Bank Secrecy Act) or in its dealings with federal entities (such as the Financial Crimes Enforcement Network of the US Treasury Department) who are involved in money laundering repression" and "that the Canadian authorities will not assist the US authorities in collecting a US tax liability if the person was a Canadian citizen when the liability arose… ."

See summaries under Treaties – Art. 26A and Art. 25.

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 26A Art. 26 of US Convention did not prohibit FATCA information exchanges 174

Pacific Network Services Ltd. v. MNR, 2002 DTC 7585 (FCTD)

implied power to exercise requirements for information

Although Article 26 of the Canada-France Income Tax Convention did not specifically provide (as did paragraph 2 of Article 27 of the Canada-U.S. Income Tax Convention) that the requested state was required to endeavour to obtain the requested information in the same way as if its own taxation was involved, it nonetheless was clear, in light of the wording of Article 26 and in light of the Commentary to the OECD Model Convention that the requested state was required not only to exchange information already gathered by it, but also to obtain information by use of administrative measures, such as issuing a requirement under s. 231.2(1) of the Act.

See Also

Derrin Brothers Properties Ltd & Ors, R (on the application of) v A Judge of the First Tier Tribunal (Tax Chamber) & Ors, [2016] BTC 10, [2016] EWCA Civ 15

documentary demands made by HMRC pursuant to Art. 27 on UK companies being investigated by Australia were valid

The Australian Tax Office, which suspected that a UK accounting firm was providing nominee directors and shareholders to UK-incorporated companies to make them look like they were factually resident outside Australia, made a request to the UK Revenue (HMRC) pursuant to Art. 27 of the UK-Australia Treaty (somewhat similar to Art. 24 of the Canada-U.K. Treaty). HMRC, in turn (following permission granted in a First Tier Tribunal hearing) sent demands for documents respecting these services of the accounting firm and the movement of fund to the accounting firm and three banks under a U.K version of ITA s. 231.2 containing somewhat more elaborate procedural safeguards.

Sir Terence Etherton rejected arguments that the various companies named in these demands had to be told prior to the FTT hearing who the taxpayers being investigated were and why the documents were reasonably required to establish the taxpayers' tax position,

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) third party notices to UK accounting firm and banks did not require them to be given explanation why information required 849

Administrative Policy

5 April 2015 CRA Press Release (respecting Panama Papers)

CRA will communicate with Treaty partners to obtain any missing Panama Papers

Recent media coverage raises questions about leaked documents from a Panama law firm relating to the offshore financial affairs of numerous individuals worldwide.

...The Agency is actively pursuing the cooperation of its tax treaty partners and the International Consortium of Investigative Journalists to obtain all of the leaked records that pertain to Canadian residents.

…The Minister of National Revenue has instructed CRA officials to obtain the data leaked through the Panama Papers in order to cross-reference this information with the data already obtained through the Agency’s existing investigation tools. The CRA will be communicating with its treaty partners to obtain any further information that may not currently be in its possession

22 March 2016 Internal T.I. 2016-0632941I7 - BEPS exchange of tax rulings

types of rulings exchanged under BEPS

In the context of Canada’s BEPS commitment to exchange information with other countries on certain tax rulings, effective April 1, 2016 IC 70-6 will be revised to indicate that summaries of the contents of the following categories of rulings may be exchanged with the countries of residence of the immediate and ultimate parent and certain other parties (which countries may then ask to receive relevant portions in more detail) - re:

a) preferential regimes (for Canada, including international shipping and certain foreign life insurance operations of a Canadian company);

b) cross-border transfer pricing;

c) downward adjustment not directly reflected in the taxpayers’ accounts;

d) permanent establishments; and

e) related party conduits.

88 C.R. - F.Q.16

The taxes covered under the Convention do not include provincial taxes, and RC cannot ask for information on behalf of the province.

88 C.R. - F.Q.18

RC routinely provides copies of NR4 forms to the U.S.


Gouin-Toussaint, "Revenue Canada's International Tax Programs Directorate", Tax Profile, October 1992.