Cameco – Federal Court of Appeal finds that CRA cannot under s. 231.1(1) compel oral answers to its questions other than for aid in auditing taxpayer books and records

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 found that s. 231.1(1)(d) was limited to providing CRA aid in its “inspection, search, examination or review of records,” whereas here, CRA sought “oral answers to oral questions” in order to facilitate its “understanding of Cameco's potential tax liability.”

The Crown submitted that the word “audit” in the power under in s. 231.1(1)(a) to “inspect, audit or examine” encompassed the authority to ask questions of employees of a taxpayer, including the employees of its overseas subsidiaries, and to require that they be answered orally.

Rennie JA instead found that the word “audit,” like the words “inspect” and “examine,” were directed to “the book and records” of the taxpayer and that “[o]ral examination is not the ordinary meaning of the word audit.” He also found it telling that 1986 amendments eliminated the word “orally” from the stated duty to answer all proper questions “relating to the audit.”

Neal Armstrong. Summaries of Canada (National Revenue) v. Cameco Corporation, 2019 FCA 67 under s. 231.1(1)(a) and Statutory Interpretation – Ejusdem generis and Redundancy.