Stankovic – Federal Court finds that a taxpayer with an unreported Swiss bank account was not yet under criminal investigation

CRA found out from the French authorities that the taxpayer was on the list obtained from a disgruntled HSBC employee of those with large Swiss bank accounts. The taxpayer had not reported the account or the interest thereon. When CRA sought a compliance order under s. 231.7(1) for the taxpayer to answer its requests for information issued under s. 231.1(1), the taxpayer argued that it was obvious that this was occurring pursuant to a criminal investigation of her. Russell J disagreed, stating that:

Offshore accounts are not, per se, illegal and it is the duty of the Minister under the Act to inquire and ensure that those with offshore accounts are meeting their tax liabilities. … If the Respondent’s position were accepted, it would mean that, given the government’s intent to deal with offshore tax offenders, every Canadian taxpayer with an offshore bank account would be immune from compliance with the audit requests made under s 231.1(1) because this could lead to criminal proceedings at some time in the future. …

[A] mere suspicion does not change the predominant purpose of an audit into a criminal investigation. See Jarvis … .

He also found (following a Quebec Court of Appeal decision dealing with the same list) that CRA’s use of information stolen by the disgruntled employee did not violate the taxpayer’s Charter rights.

Neal Armstrong. Summaries of Canada (National Revenue) v. Stankovic, 2018 FC 462 under s. 231.1(1) and Charter s. 7.