Coopers Park – Tax Court of Canada grants production of documents reviewed by the GAAR Committee in a similar case that then was applied to the taxpayer

The taxpayer, which had been assessed under s. 245(2) to deny the carryforward of losses and credits, sought the discovery of proposals made by CRA to two unrelated taxpayers that set out its understanding of the facts and its legal analysis thereof. The CRA auditor had considered such documents (which he had placed in the file) but had not relied on them in auditing the taxpayer.

In finding that they were discoverable, Owen J stated:

[I]n GAAR cases, the legal analysis of the Minister in support of the policy relied upon is subject to discovery. …

[R]eliance is not the test for relevance. … [C]onsideration of the documents in the context of the audit of the Appellant is sufficient to make them relevant for the purposes of discovery.

CRA had relied on the GAAR Committee’s analysis of a similar case in deciding to assess the taxpayer under GAAR, so that a GAAR Committee review of the taxpayer’s transactions was considered unnecessary. After noting that “[i]f the GAAR Committee had considered the Appellant’s case, there is no doubt that the Appellant would be entitled to discovery of all non‑privileged documents considered by the GAAR Committee in deciding to assess the Appellant under the GAAR,” Owen J stated:

[T]he Appellant is equally entitled to all non-privileged documents considered by the GAAR Committee in deciding to assess under the GAAR the unrelated taxpayer described in the Similar Case … because that decision directly resulted in the subsequent decision to assess the Appellant under the GAAR.

Accordingly, such documents were discoverable, subject to redaction of all information identifying third parties, and subject to any claims of solicitor-client privilege.

Summary of Coopers Park Real Estate Development Corporation v. The Queen, 2022 TCC 82 under Rule 83(1).