Sharp – Federal Court of Appeal finds that the taxpayer failed to allege what, if any, criminal investigations of the taxpayer were assisted by information generated by s. 231.2 demands

The respondent taxpayer alleged that s. 231.2 requirement letters issued to him were invalid because they were issued for the predominant purpose of furthering criminal investigations contrary to Jarvis. In finding that the taxpayer’s statement of claim should be struck, Woods JA applied the principle that even “if … a party is a stranger to a transaction, the transaction must still be described with sufficient detail that the other party can identify it” and noted, regarding the taxpayer’s allegation that the Audit Division shared information gathered from the requirement letters with criminal investigators, that the “pleading does not link the alleged sharing of information to any particular criminal investigation.” Furthermore, although a general statement of the Minister suggested “that audits may precede criminal investigations … this is permitted in Jarvis.”

However, the taxpayer was given leave to file an amended statement of claim on the condition that “the pleading identify with particularity the facts giving rise to the cause of action.”

Neal Armstrong. Summary of MNR v. Sharp, 2022 FCA 138 under Charter, s. 8.