Canada (National Revenue) v. Bambora Inc., 2023 FC 980

Toronto, Ontario, July 19, 2023

PRESENT: Justice Andrew D. Little

ORDER

UPON HEARING the application of the Minister of National Revenue (the “Minister”) made under subsection 231.2(3) of the Income Tax Act, RSC 1985, c 1, (5^th Supp), as amended (the “ITA”), and subsection 289(3) of the Excise Tax Act, RSC 1985, c E-15 (the “ETA”) for judicial authorisation to impose on the respondent, Bambora Inc. (“Bambora”) a requirement to provide certain information relating to unnamed persons (the “Requirement”);

AND UPON reviewing the materials filed by the Minister and hearing submissions on her behalf at a hearing on June 27, 2023;

AND UPON recognizing that the respondent Bambora filed no evidence or submissions on this application and no one appeared for the respondent at the hearing on June 27, 2023, so this application is unopposed;

AND UPON RECOGNIZING that there is an affidavit before the Court advising, based on information in the records of Canada Revenue Agency (“CRA”), that:

1. Bambora is a Canadian company incorporated on December 29, 1999. Its headquarters are located in Victoria, British Columbia;

2. Bambora offers mobile payment device options and processing products and services such as card readers;

3. The Minister’s representatives at CRA identify sectors at risk of non-compliance with the ITA and/or the ETA. One of CRA’s top priorities and national strategies is finding and reducing the underground economy. CRA identified vendors or merchants using mobile payment processors as potential audit targets to assess unreported and under reported income. Examples of such merchants are those who attend trade shows, fairs, exhibitions and commissioned sales representatives of businesses involved in direct sales.

4. The Minister seeks the names of all Canadian merchants that have registered with and use Bambora’s mobile payment and processing products and services (the “Merchants”) for the period from January 1, 2019 to present (the “Period”);

5. The Minister and CRA do not know the identity of Bambora’s Merchants. This application is the only means available to the Minister to obtain that information.

6. The Minister further seeks the Merchants’ contact information, banking information, and total monthly aggregate of transactions information (as defined) between the Merchants and their customers (“Sales History”);

7. Bambora knows the names of its Merchants and maintains records that include their identities, contact information, banking information, and Sales History;

8. The Minister seeks to verify whether the Merchants have complied with their duties and obligations under the ITA and/or the ETA, including whether they properly reported all of their income during the Period and collected, reported, and remitted all goods and services tax (“GST”) and/or net tax; and

9. Because the Minister and CRA do not know the identities of the Merchants, the Minister seeks judicial authorization to impose on Bambora a requirement to provide information and documents relating to the Merchants, including their names, contact information, banking information, and Sales History;

AND UPON RECEIVING, after the hearing, a revised draft letter containing the Requirement, which more precisely defines the Sales History information to be provided;

AND HAVING REGARD to the appellate courts’ guidance about the scope of the ITA and ETA provisions relied upon in this application, discussed in Roofmart Ontario Inc. v. Canada (National Revenue), 2020 FCA 85 (“Roofmart FCA”), at paras 45, 55; Canada (National Revenue) v Greater Montréal Real Estate Board, 2007 FCA 346, [2008] 3 FCR 366, at paras 21, 34 and 46-47; R v McKinlay Transport Ltd., [1990] 1 S.C.R. 627, at pp. 636-37 and 648;

AND UPON BEING SATISFIED THAT the evidence supports a conclusion that the statutory conditions contained in paragraphs 231.2(3)(a) and (b) of the ITA and 289(3)(a) and (b) of the ETA have been satisfied on this application, i.e., that the unnamed persons are ascertainable and the proposed Requirement is being issued to verify the unnamed persons’ compliance with certain duties and obligations under the statutes, as follows:

1. The Merchants are customers of and registered with Bambora. The Merchants use Bambora’s products or services to process payments from their customers. Those payments presumably represent income or revenue to the Merchants, which may be reportable under the ITA. The payments presumably include GST collected and remittable under the ETA.

2. Bambora charges a fee based on the value of each transaction between each of the Merchants and each Merchant’s customers. The evidence suggests that Bambora’s mobile processing products and services involve many millions of dollars of payments to Merchants from their customers each year. The Merchants are in a sector targeted by CRA as having unreported and under reported income.

3. The Merchants are an “ascertainable” group as understood by the binding case law: Roofmart FCA, at paras 38-41, aff’ing Canada (National Revenue) v Roofmart Ontario Inc., 2019 FC 506 (“Roofmart FC”), at paras 10-11; Rona Inc. v Canada (National Revenue), 2017 FCA 118, at para 6; eBay Canada Limited v. Canada (National Revenue), 2008 FCA 348, [2010] 1 FCR 145, at para 11; Greater Montréal Real Estate Board, at para 15. See also Ghermezian v Canada (Attorney General), 2020 FC 1137, at paras 120-142.

4. The proposed requirement is being made for the purpose of verifying the Merchants’ compliance with their duties and obligations under the ITA and/or ETA, also as understood by the binding case law: Roofmart FCA, at paras 45-47, aff’ing Roofmart FC, esp. at para 13; Greater Montréal Real Estate Board, at paras 21, 44-45, 50, aff’ing Canada (National Revenue) v The Greater Montréal Real Estate Board, 2006 FC 1069, at paras 6, 9-10. Applying that law, the Minister’s proposed Requirement is sufficiently tethered to the purposes of verification of compliance (Roofmart FCA, at paras 7, 45-47) because the affidavit evidence, including as summarized in paragraphs 1-2 immediately above, adequately ties the contents of the proposed Requirement (namely, the request for each Merchant’s aggregate of gross monthly transaction amounts (as measured in Canadian dollars) processed by Bambora between the Merchant and the Merchant’s customers) to the verification of compliance of obligations under the statutes related to filing and reporting revenue or income under the ITA and the obligations to collect, remit and report GST under the ETA.

AND UPON considering whether it is appropriate to provide for a condition, as contemplated by the chapeau language in ITA subsection 231.2(3) and ETA subsection 289(3), to require the Minister to take all reasonable steps to work with the respondent with a view to minimizing the administrative burden of complying with the Requirement; although there is information in the record suggesting the Requirement would cover many thousands of Merchants and that compliance with the Requirement could result in impacts on the respondent’s daily business operations, that information in the record is in the form of letter from the respondent to the Department of Justice in November 2022. The respondent did not file evidence on this application and did not appear or make submissions to the Court expressing concerns about the administrative burden of complying with the Requirement (despite being served with the application record and being provided with notice of the hearing). The Court will not add a condition to the Order in this case having regard to all the circumstances;

AND UPON noting that the authorization in this Order does not extend to the last paragraph of the proposed Requirement (see Canada (National Revenue) v Royal Bank of Canada, 2021 FC 830, at para 31);

THEREFORE THIS COURT ORDERS that:

1. The Minister is authorized to impose on Bambora a requirement pursuant to subsections 231.2(1) of the Income Tax Act and 289(1) of the Excise Tax Act relating to the Merchants, in substantially the form attached hereto as Appendix “A”.

2. There is no order as to costs.

FEDERAL COURT

SOLICITORS OF RECORD

APPEARANCES:

SOLICITORS OF RECORD: