Words and Phrases - "audit"

The respondent (“Cameco”) had appealed transfer-pricing assessments to the Tax Court. CRA then audited subsequent years, where essentially the same issues arose, and applied to the Federal Court for an order pursuant to s. 231.7(1) compelling Cameco to submit 25 listed employees of it and subsidiaries to CRA interviews. The Federal Court dismissed this application.

In dismissing the Crown’s appeal of such dismissal, Rennie JA noted that, under s. 231.1(1)(d) “[t]he obligation to assist is in aid of the inspection, search, examination or review of records” (para. 22), whereas here the Minister, rather than seeking “to compel answers as to the taxpayer’s knowledge of their provenance and location,” sought “oral answers to oral questions” in order “to facilitate her understanding of Cameco's potential tax liability (paras. 13-14).

The Crown submitted (as summarized at para. 7) that in s. 231.1(1)(a):

“inspect, audit or examine” are broad and encompass, on their own, the authority to ask questions of a taxpayer or employees of a taxpayer, including the employees of its overseas subsidiaries, and to require that they be answered orally.

In rejecting this submission, Rennie JA indicated (at para. 18) that the word “audit” in this phrase took its colour from “inspect” and “examine,” which were directed to “the book and records” of the taxpayer, that “[o]ral examination is not the ordinary meaning of the word audit” (para. 19), that if the requirement to answer questions were implied in s. 232.1(1)(a) “then the obligation in paragraph (d) and the express power to compel answers, would be unnecessary” (para. 23) and that under 1986 amendments to what now is s. 231.1(1) (at para. 32) “that sought ‘to provide clear limits to Revenue Canada’s enforcement powers’”:

The elimination of the word “orally” from the duty to answer all proper questions “relating to the audit” as well as the elimination of the obligation to give answers under oath or by statutory declaration is telling. (para. 33)