Tellza – Federal Court finds that it was not unreasonable for CRA’s to exercise its audit power by requesting a copy of all electronic records for a 20-month period

CRA issued a letter to Tellza under ETA s. 288(1) (similar to ITA s. 231.1(1)) to obtain all of Tellza’s electronic accounting data for a 20-month period. Fuhrer J rejected Tellza’s position that this letter was a "requirement" and not a "request" and hence, should have issued under the ETA s 289(1) (similar to ITA s. 231.2(1)), instead of the ETA s 288(1), and found that it was not unreasonable for CRA to have issued the letter under the latter provision instead. In this regard, she indicated that, although s. 288(1) was narrower in scope than s. 289(1), s. 288(1) nonetheless “grants an authorized person the power to request or require a taxpayer to provide information in any form,” and further stated that “the authorized person is not limited, in a modern, electronic era, to an inspection, audit or examination of the taxpayer’s documents and records at their premises.”

After having noted that the word “document” (used in s. 288(1)), was effectively defined in s. 123(1) to include “any other thing containing information, whether in writing or in any other form” (her emphasis), she also rejected the contention of Tellza that “the request for records in an electronically readable format, along with the system administrator’s user ID and password, where applicable, falls outside the scope of the inspection power in the ETA s 288(1).”

Neal Armstrong. Summary of Tellza Inc. v. Canada (National Revenue) 2021 FC 853 under ETA s 288(1).