Kyard Capital – Court of Quebec finds that it was unnecessary to waive privilege in order to substantiate the nature of legal services provided

The individual taxpayer (“Fontaine”), who was the president and majority shareholder of a corporation (“Kyard”), was assessed under the Quebec equivalent of s. 15(1) when Kyard paid his fees for defending against an action brought against him by his ex-spouse. He did not disclose to the ARQ the text of the legal accounts on the grounds of privilege. In this regard, Chalilfour JCQ noted that this decision to not waive the privilege made Fontaine’s task more difficult but should not be “fatal,” stating that “Otherwise taxpayers would be required to waive professional privilege.” Cf. Orth.

She then accepted Fontaine’s testimony (without any real documentary corroboration) that the action had been defended as a threat to Kyard’s business - so that he had not received a taxable benefit.

Neal Armstrong. Summaries of Kyard Capital 2007 Inc. v. Agence du revenu du Québec, 2019 QCCQ 1617 under s. 15(1) and s. 6(1)(a).