In recent news, two Canadian women are suing the Attorney General of Canada in Federal court claiming that the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act is a violation of their fundamental rights and freedoms.

The two women, Virginia Hills and Gwendolyn Deegan, are considered 'US Persons' under American law; Virginia and Gwendolyn claim that the Canadian government unconstitutionally shared their private banking information with the US Internal Revenue Service.

According to American tax law, an individual is deemed a 'US Person' if they were born in the US or if they were born outside the country to married US citizens of whom at least one lives in the US.

The IRS taxes all world income of a 'US Person' regardless of where that person lives, works or earns income. Therefore, a US Person residing in Canada can still generate US tax liabilities such as capital gains on personal homes which aren't taxed in Canada. US Persons must declare all of their income, even if the income earned is not enough to generate a US tax liability. If the IRS finds that a US Person willingly neglected their tax obligations, the individual will be subject to several fines, penalties and possibly criminal indictment.

Plaintiff Hillis was born in Michigan in 1946 and has lived in Canada since the age of 5; both her parents were Canadian citizens. Hillis only recently discovered that non-resident US citizens are required to file with the IRS. Hillis claims she has never declared or paid taxes to the U.S. and that she does not have a US passport nor a taxpayer identification number.

Similarly, plaintiff Deegan was born in Washington state to one Canadian and one US parent. Deegan moved to Canada when she was 5 and hasn't lived in the US ever since. Deegan also has never filed or paid US taxes and does not have a US passport.

The plaintiffs have decided against forfeiting their US citizenships as they would be required to file overdue tax returns and provide bank information for the past several years.

The Foreign Account Tax Compliance Act (FACTA) enacted by US Congress in 2010 allows the US government to impose sanctions on foreign financial institutions that refuse to provide the banking information of US Persons. FACTA however exposes foreign banks to further sanctions for violating client confidentiality laws. To complement FACTA, the Canadian government passed legislation which positions the government of Canada as an intermediary between Canadian banks and the IRS. Thus, Canadian financial firms would provide the banking information of US Persons to the Canadian government who would relay it to the IRS.

The plaintiffs claim these legislations are unconstitutional and have put them at a serious disadvantage by affecting their personal banking matters and their careers. The court has yet to impose a ruling on this matter.

GTA Wealth Management Inc. and its subsidiary Tax Doctors Canada, has extensive experience and an unparalleled record of success in the field of Canada-US tax requirements. Our team of professional tax accountants attend conferences all across North America in order to keep up-to-date with the constantly changing and increasingly complicated area of Canada-US tax rules and regulations. Penalties and methods of investigation are becoming more draconian and severe, so it is in your best interest legally and financially, to make sure you are fully complying with the latest Canada-US tax rules and regulations.

Attempting to handle your own tax issues can be complicated. If you are a dual citizen of Canada and the US, your Canad-US tax obligations will only become more complex; therefore is it important to hire the professional tax accountants at GTA Wealth Management Inc. to protect yourself legally and financially. Contact or call GTA Wealth Management toll free 1 855 GTA WLTH (855 482 9584) to accelerate your ride to financial independence. A professional wealth management financial advisor is ready to serve your wealth management, tax return and planning needs. GTA Wealth Management Inc. has three convenient locations in Mississauga, Toronto and Markham to serve you.

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