Blue Bridge – Federal Court of Appeal finds that CRA was not responsible for analyzing whether information requested by France could be used contrary to the French Treaty

Art. 26(1) of the Canada-France Convention provides for exchanges of “such information as is foreseeably relevant … to the administration or enforcement of the domestic laws concerning taxes of every kind … imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Convention.”

CRA issued requests for information (RFIs) to the appellant (“Blue Bridge”), which was the trustee of some trusts, as a result of a request made by the French tax authorities pursuant to Art. 26 for various particulars regarding the trusts, including the identity of the beneficiaries and financial information.

Blue Bridge argued that it was the Minister’s responsibility to ensure that the “taxation … not contrary to the Convention” condition in Art. 26 was met before transmitting the requested information to France, whereas here, France was seeking to impose tax under a French wealth-tax statute which attributed all foreign trust assets to a French settlor or beneficiary in order to subject them to the tax, which in its view raised the possibility of the information being used to levy tax contrary to the Convention.

In rejecting this argument, Rivoalen JA determined that the Federal Court did not have expert evidence of French law so as to be able to conclusively address this argument, and that this argument was based on facts that had not been verified, and could not be verified at this stage, by the Minister. She stated:

The judge rightly concluded that a requirement for thorough research and analysis of the facts and the law of the requesting State would impede the proper and effective operation of the Convention’s provisions … .

She concluded that the Federal Court had not erred in finding that the requirements for issuing a compliance order under ITA s. 231.7(1) had been met.

Neal Armstrong. Summary of Société de fiducie Blue Bridge Inc. v. Canada (National Revenue), 2021 CAF 62 under Treaties – Income Tax Conventions – Art. 27.