SPE Valeur – Tax Court of Canada finds that criminally seized documents could be used in a subsequent civil reassessment under s. 163(2)

The Criminal Investigations Directorate seized records of taxpayers in connection with its investigation, but ultimately returned the file to the audit branch based on a cost-benefit analysis. As it happened, the individual responsible for the criminal investigation was transferred to the audit branch at the same time, and while now working for the audit branch, he used copies of the seized records in reassessing the taxpayers, including for a gross negligence penalty.

In finding that there had been no infringement of the taxpayer’s s. 8 Charter rights, so that the seized documents were admissible and not excluded under s. 24(2) of the Charter, D’Auray J noted that “Brown [2013 FCA 111] … determined that documents seized in a criminal search could be admitted into evidence on the appeal of an assessment,” and that the taxpayers had no reasonable expectation of privacy respecting the seized documents.

The seized records included emails on the company server that had been received from a third party and that concerned the transactions at issue in the reassessments. D’Auray J also rejected the taxpayers’ submission that because the seized emails were not records required to be maintained by ITA s. 230, therefore they should have their confidential character preserved,

Neal Armstrong. Summaries of SPE Valeur Assurable Inc. v. The Queen, 2019 CCI 174 under Charter s. 24(2), s. 8 and s. 7.