Levett – Federal Court finds that CRA had “pursued all reasonable domestic means available” before making an information request under the Swiss Treaty
The applicants (two couples and a corporation owned by one of them), whose disclosure that they had no foreign assets was doubted by CRA, brought an application to have CRA requests to the Swiss federal tax administration for information pursuant to Art. 25 of the Canada-Swiss Treaty declared invalid on the grounds that “the CRA did not exhaust all domestic avenues of compliance and did not provide full and frank disclosure to the Swiss authorities.” In dismissing the application, St-Louis J found:
- Regarding the stipulation in Art. 25, para 1 that “an exchange of information will only be requested once the requesting Contracting State has pursued all reasonable means available under its internal taxation procedure to obtain the information,” she stated (citing Blue Bridge, 2020 FC 893) that the “purpose of the ‘foreseeably relevant’ standard is to maximise the extent of the information that can be exchanged.”
- “[N]othing prevented the CRA auditor from faithfully presenting unconfirmed information or suspicions” to the Swiss authorities.
- Regarding the requirement in s. 2(a) of the Interpretative Protocol to the Treaty that, before sending a request for exchange of information pursuant to Art. 25 of the Convention, the CRA must have pursued “all reasonable means available under its internal taxation procedure to obtain the information” she found (at para. 162) that she was “satisfied that the CRA pursued all reasonable domestic means available” in light of the various roadblocks faced by CRA (e.g., the individual applicants claimed to have no foreign assets and to have no relationship with the corporations named by the AMF).
- Furthermore, the information sought of the corporate applicant was in the possession of a foreign corporation (“Socimbal”), as to which St-Louis J stated that the “auditor had no legal authority to require information from the contact person at Socimbal, as he was not a Canadian resident or a person carrying on business in Canada” and that “the Applicants have not convinced me that the CRA had a legal obligation to contact the person abroad simply because it was provided with the contact information.”
Neal Armstrong. Summary of Levett v. Canada (Attorney General), 2021 FC 295 under Treaties –Income Tax Conventions - Art. 27.