BMO Nesbitt Burns – Federal Court of Appeal confirms that providing a full spreadsheet would not breach privilege or amount to an impermissible self-audit
The Federal Court had granted a CRA application pursuant to s. 231.7 seeking an order requiring BMO Nesbit Burns (“NBI”) to provide an unredacted version of a spreadsheet in connection with CRA’s audit of suspected dividend rental arrangement transactions of NBI.
NBI in response to the initial request made pursuant to s. 231.1 had redacted a column in the spreadsheet on the basis that it reflected written legal advice it had received. In rejecting NBI’s claim of privilege, Kane J had stated that the spreadsheet was not more than the mere “operational outcome or end product of legal advice” and did not satisfy the requirement that it “communicate … the very legal advice given by counsel.” Without reviewing these findings in detail, Locke JA found no reversible error.
In rejecting NBI’s further argument that “the Minister’s application should not have been granted in the absence of an ongoing tax audit,” Locke JA noted that the audit was still ongoing when CRA first requested the unredacted spreadsheet,” and then stated:
[I]t cannot have been Parliament’s intent to permit the target of an audit to avoid an order pursuant to subsection 231.7(1) of the Act by delaying compliance with a document request until after issuance of a notice of reassessment. …
He also very briefly rejected NBI’s submission (based on BP Canada) “that ordering production of the unredacted Spreadsheet amounts to requiring NBI to conduct a self-audit or to reveal its ‘soft spots’,” simply stating that BP Canada was distinguishable.
Neal Armstrong. Summaries of BMO Nesbitt Burns Inc. v. Canada (National Revenue), 2023 FCA 43 under s. 232(1) – solicitor-client privilege and s. 231.7.