Miller – Federal Court issues a s. 231.7 compliance order for a description of the terms of an oral contract

Mr. Miller did consulting work for a European client (“Casala”). He also received payment of his professional fees from other clients through deposits in trust with two Canadian law firms.

Walker J granted a compliance order pursuant to s. 231.7(1) regarding an extensive list of items that CRA had demanded including information regarding the terms and conditions of his oral contract with Casala and copies of the trust ledgers from one of the law firms.

Regarding her order to disclose the terms of his oral contract with Casala, she stated that this was information “that Mr. Miller ought to have documented in his records,” that the “requests do not stray into the problematic type of questions identified in Cameco and BP Canada” e.g., an attempt “to compel Mr. Miller to reveal his ‘soft spots’,” and that a “request for the information that would have been included in any written contract and issued invoices is the Minister’s mechanism to ensure her access to basic information necessary for the Audit.”

Regarding the required disclosure of the trust ledger accounts with the law firms, she stated:

I do not agree that the Cameco decision establishes that a taxpayer discharges their obligation to satisfy a request that is otherwise within the scope of subsection 231.1(1) with a response that they simply do not have those documents in their possession. … [A] taxpayer is required to exercise reasonable efforts to obtain and provide to the Minister information and documentation that should be in its books and records.

Walker J declined to make a compliance order for a description of the development of Mr. Miller’s business relationship with Casala.

Neal Armstrong. Summary of Canada (National Revenue) v. Miller 2021 FC 851 under s. 231.1(1).