Canada (National Revenue) v. KPMG Canada LLP, 2026 FC 793

UPON THE APPLICATION of the Minister of National Revenue [Minister] pursuant to s 231.7 of the Income Tax Act, RSC 1985, c 1 (5th Supp), as amended [ITA], for an Order that KPMG Canada LLP [KPMG] produce documents and information specified in a Requirement for Information [RFI] issued to KPMG on April 25, 2024 pursuant to s 231.2(1) of the ITA;

AND UPON reading the materials filed;

AND CONSIDERING the Order of this Court issued on May 7, 2026 (Canada (Minister of National Revenue) v KPMG Canada LLP, 2026 FC 610 [KPMG Interim Order], excerpts of which are reproduced below for ease of reference;

AND CONSIDERING that:

• (a)in March 2022, the Canada Revenue Agency [CRA] commenced audits of ASB Holdings Limited [ASB], NSB Holdings Limited [NSB], CEB Holdings Limited [CEB], SDH Holdings Limited [SDH], SDS Holdings Limited [SDS], Aaron Bleeman, Nathan Bleeman, Eli Bleeman, Shifra Hofstedter, Deena Smursz, Bleeman Holdings Limited [BHL], and Asden Holdings Inc [AHI] (collectively, the Taxpayers] for their 2019 and 2020 taxation years;

• (b)the purpose of the audits is to verify whether the Taxpayers complied with their duties and obligations under the ITA, and properly reported their worldwide income for the 2019 and 2020 taxation years;

• (c)the RFI required KPMG to provide the CRA with certain information and documents related to the valuation, tax planning, and professional services provided to the Taxpayers or any person on their behalf at any time between January 1, 2016, to December 31, 2020 [Required Material];

• (d)KPMG was given 30 days from the date of the RFI to provide all of the Required Material to the CRA; KPMG subsequently sought extensions of time from the CRA and Department of Justice [DOJ] to provide the Required Material;

• (e)KPMG did not provide the Required Material by the specified deadlines; instead, KPMG claimed that a third party had asserted solicitor-client privilege or other privilege over all responsive documents and information described in the RFI;

• (f)on February 14, 2025, KPMG provided a privilege log to the DOJ [Privilege Log]; the Privilege Log lists 924 documents of unknown length or complexity; and

• (g)ASB, NSB, CEB, SDH, and SDS have provided to the CRA 90 of the documents identified in the Privilege Log and have not asserted privilege in respect of those documents [Disclosed Material], and the CRA is no longer seeking disclosure of the Disclosed Material from KPMG;

AND CONSIDERING that:

• (a)KPMG takes no position as to whether the documents listed in the Privilege Log contain information that is subject to solicitor-client privilege or other privilege;

• (b)KPMG maintains that the asserted privileges do not belong to KPMG, and may be waived only by its clients; KPMG cannot purport to unilaterally waive the privileges;

• (c)KPMG has offered to provide the Court with copies of the documents listed in the Privilege Log in a sealed envelope or by other means that protect their confidentiality; and

• (d)KPMG has indicated that it will abide by any determination made by the Court regarding the validity of the claims of privilege made by its clients;

AND CONSIDERING that:

• (a)the party asserting a privilege bears the burden of proving that the disclosure of unredacted documents will reveal privileged legal advice (BMO Nesbitt Burns Inc v Canada (National Revenue), 2023 FCA 43 at para 4);

• (b)the Court has the power to receive documents for which privilege is asserted in a sealed envelope and review them so as to determine whether a proper claim of privilege has been made out; however this power should be used sparingly (Canada (National Revenue) v Revcon Oilfield Constructors Incorporated, 2015 FC 524 at para 12, citing (Canada (Privacy Commissioner) v Blood Tribe Department of Health, 2008 SCC 44 at para 17);

• (c)the request for the Court’s examination must never be made lightly and certainly not as a matter of course – solicitors bear a serious responsibility to resort to this kind of court intervention only when the circumstances in which the privilege is claimed compel them to do so (GWL Properties Ltd v WR Grace & Co of Canada Ltd, 1992 CarswellBC 577, 34 A.C.W.S. (3d) 1209);

• (d)the suitability of a review may depend on a number of factors, including the sheer volume of documents in issue and the nature of the dispute (Keefer Laundry Ltd v Pellerin Milnor Corp et al, 2006 BCSC 1180 at para 73);

• (e)to justify the diversion of scarce judicial resources to the examination of purportedly privileged documents, the party resisting disclosure on the basis of privilege must in the first instance satisfy the court on affidavit evidence that prima facie grounds for a claim of privilege are made out, recognizing that there are limits on what may be disclosed without waiving privilege (Ralmax Properties Ltd v Pt Ellice Properties Ltd, 2021 BCSC 2454 at para 12); and

• (f)where claims of privilege are made over communications with third parties such as accountants, the affidavit evidence must describe how the relationship of the third-party to the client, or the solicitor, or the circumstances in which the communication was made, brings each communication within the scope of the privilege (Ibid);

AND CONSIDERING that:

• (a)the Privilege Log does not contain sufficient information or particulars to support the claims of privilege; and

• (b)having regard to all of the circumstances, including the sheer volume of documents in issue, the nature of the dispute, and the dearth of information necessary to assess the claims of privilege, this is not a suitable case for the Court to exercise its power to receive the documents in a sealed envelope and review them so as to determine whether a proper claim of privilege has been made out;

AND CONSIDERING that:

• (a)the KPMG Interim Order permitted any person or entity who asserts a claim of privilege in respect of any information contained in a document listed in the Privilege Log, within thirty (30) days of the date of the Order, to bring a motion to be added as a respondent and to make submissions respecting the assertion of privilege;

• (b)the KPMG Interim Order provided that, if a person or entity who sought to be added as a respondent pursuant to the KPMG Interim Order preferred to remain anonymous, that person or entity could seek an Order to that effect accompanied by affidavit evidence in support of the request;

• (c)the KPMG Interim Order required KPMG to provide a copy of the KPMG Interim Order to any person or entity who asserts a claim of privilege in respect of any information contained in a document listed in the Privilege Log; and

• (d)the KPMG Interim Order stated that, if no person or entity sought to be added as a respondent pursuant to the KPMG Interim Order, the Court may decide the Minister’s application without further appearance of the parties;

AND CONSIDERING that more than thirty (30) days have elapsed since the Court issued the KPMG Interim Order, and no person or entity who asserts a claim of privilege in respect of any information contained in a document listed in the Privilege Log has brought a motion to be added as a respondent and to make submissions respecting the assertion of privilege;

AND CONSIDERING that the record before this Court is the same as when it issued the KPMG Interim Order, and it remains the case that:

• (a)the Privilege Log does not contain sufficient information or particulars to support the claims of privilege;

• (b)the parties asserting the privilege have not discharged their burden of proving that the disclosure of unredacted documents will reveal privileged legal advice; and

• (c)to the extent that claims of privilege are made over communications with third parties such as accountants, there is no evidence before the Court that describes how the relationship of the third-party to the client, or the solicitor, or the circumstances in which the communication was made, brings each communication within the scope of the privilege;

AND CONSIDERING that:

• (a)the Minister seeks costs and has submitted a draft Bill of Costs;

• (b)KPMG asks that no costs be awarded, considering that it is an unwilling participant in this application and has sought only to respect the professional duties owed to its clients; and

• (c)where a respondent has acted appropriately in its dealings with its clients, with the Minister, and with the Court, costs will not ordinarily be ordered against that respondent (Canada (National Revenue) v Jakabfy, 2013 FC 706 at para 7);

THIS COURT ORDERS that :

1. KPMG shall, within 30 days of the date of this Order, provide the Minister with the following outstanding Required Material, as explained and identified in the RFI and Privilege Log attached as Appendices A and B to this Order:

• (a)items 1(a), (b), (c), (d), and (d)(i), 2, 3, 4(a), (b), (c), (d), (e), (f), (g), (h), and (i), 5, 6, and 7 of the RFI issued on April 25, 2024 and attached as Appendix A to this Order;

• (b)items 1, 2, 4 to 20, 22 to 42, 44 to 58, 63 to 72, 74 to 85, 87 to 94, 100, 102, 103, 105, 106, 107, 110 to 157, 159 to 182, 184 to 190, 192 to 202, 204, 205, 206, 208, 210 to 218, 220, 221, 225, 227 to 234, 236 to 265, 267 to 320, 322, 323, 324, 327 to 346, 348 to 384, 386 to 405, 411, 414 to 510, 512, 513, 514, 516 to 525, 527 to 549, 551 to 559, 561, 562, 563, 564, 566 to 630, 632 to 665, 667 to 684, 689 to 698, 700 to 718, 720, 722, 723, 724, 727, 728, 729, 732 to 737, 739 to 804, 806, 807, 808, 811 to 815, 817, 819 to 823, 826, 828 to 836, 838 to 843, 845 to 852, 854, 855, 856, 858 to 865, 870 to 875, 877 to 883, and 890 to 924 of the Privilege Log attached as Appendix B to this Order; and

• (c)for greater certainty, KPMG is not required to produce the Disclosed Material, i.e., items 3, 21, 43, 59, 60 to 62, 73, 86, 95 to 99, 101, 104, 108, 109, 158, 183, 191, 203, 207, 209, 219, 222 to 224, 226, 235, 266, 321, 325, 326, 347, 385, 406 to 410, 368 412, 413, 511, 515, 526, 550, 560, 565, 631, 666, 685 to 688, 699, 719, 721, 725, 726, 730, 731, 738, 805, 809, 810, 816, 818, 824, 825, 827, 837, 844, 853, 857, 866 to 869, 875, 876, and 884 to 889 of the Privilege Log attached as Appendix B to this Order.

2. No costs are awarded.

Appendix A

Appendix B