Christen – Federal Court finds that a voluntary disclosure planned before, but made after, the audit notification could be considered non-voluntary - but annuls the CRA rejection anyway

In May 2015, the plaintiff authorized her law firm to represent her in making a voluntary disclosure of her Swiss assets, and in the summer and fall of 2015, various documents were collected and organized to this end. However, on September 25, 2015, CRA sent a letter to the plaintiff indicating that her 2005 to 2014 taxation years were under audit regarding a failure to declare foreign property. A voluntary disclosure filing made by the plaintiff about four weeks later was rejected by the first and second CRA decision makers on the basis that it was not voluntary.

Walker J found that this decision did not represent an unreasonable exercise of Ministerial discretion under s. 220(3.1). She agreed that it would have been “inequitable and unreasonable” for a voluntary disclosure to have been rejected as being non-voluntary if made one minute after communication of an audit, but noted that this was not the situation before her, stating that “there is an important distinction between the date information is actually disclosed under the VDP and the date the taxpayer makes the decision to investigate the making of a disclosure.”

However, the (second) decision under review was annulled given that the involvement of the first decision maker in the process for the second review decision “was not minimal.” The decision was remitted to the Minister for a fresh determination by an agent with no involvement with the previous decisions.

Neal Armstrong. Summary of Christen v. Canada (Agence du revenue), 2021 CF 1440 under s. 220(3.1).