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ADMINISTRATION AND ENFORCEMENT - Audit - Requirement to provide documents or information

Tuesday, January 28, 2020 @ 6:23 AM  

Lexis Advance® Quicklaw®
Application by the taxpayers for judicial review of the Minister’s decision to issue Requests for Information letters requesting that both applicant spouses complete a questionnaire as part of an audit of the couple's potential offshore holdings which might not have been disclosed in taxation years 2010 through 2016. The applicants refused to provide the requested information on the ground that ss. 231.1 and 231.7 of the Income Tax Act respecting Requests for Information breached their rights under ss. 7 and 13 of the Canadian Charter of Rights and Freedoms (Charter) as they violated their right to protection from self-incrimination. The applicants also argued that the Requests themselves were defective as they were unclear whether the CRA was auditing the applicants or their related entities.

HELD: Application dismissed. The Requests for Information were sufficiently clear, and the Court was able to issue an order of compliance. The Requests were clearly directed to the applicants and were issued in respect to the audit of their own personal income tax returns. Taking the letters as a whole, including the questionnaires that were sent with them, it was not difficult to see that they were directed at the applicants in their individual capacities and to understand why the CRA would request such information regarding their related entities during an audit into their foreign assets. The CRA was not conducting an alleged covert criminal investigation in the guise of a civil audit. There was no live issue in this case in respect of the eventual use of the applicants’ information they were being asked to submit to the CRA. A declaratory order that the evidence that the applicants might be compelled to provide to the CRA would receive evidentiary immunity so as not to be used against them in any other proceedings the CRA might seek to initiate was thus unnecessary. Section 13 of the Charter applied when testimony was used to incriminate a person in other proceedings. There were no such other proceedings at present. Section 13 would only be engaged when the applicants were charged with a criminal offence. With no evidence of a pending criminal investigation or reason to believe that they faced imprisonment, concerns over how their rights might or might not be affected were merely speculative. A theoretical future criminal proceeding was insufficient to allow the applicants not to provide the information sought by the CRA in this case.

Canada (Minister of National Revenue - M.N.R.) v. Friedman, [2019] F.C.J. No. 1450, Federal Court, P.G. Pamel J., December 10, 2019. Digest No. TLD-January272020003