The Federation of Law Societies of Canada is seeking a declaration that ss. 237.3 and 237.4 do not apply to lawyers

The Federation of Law Societies of Canada has filed a petition in the B.C. Supreme Court seeking inter alia declarations that ITA ss. 237.3 and 237.4 “are inconsistent with the Constitution of Canada, and of no force or effect, to the extent that those sections apply to legal professionals” and “that the term ‘advisor’ as it is used in sections 237.3 and 237.4 … be read down so as to exclude legal professionals.”

In its accompanying Press Release, the Federation stated:

Requiring legal counsel to report to a government agency on their clients’ activities causes an irreconcilable conflict with the legal and ethical duties lawyers and other legal professionals owe to their clients. Backed by penalties that include large fines and the possibility of imprisonment for noncompliance, the legislation forces legal counsel to choose between their own interests and those of their clients. This conflict undermines the duty of commitment to the client’s cause, a duty found … in the Federation’s [AML] 2015 case [2015 SCC 7] to be a principle of fundamental justice. As a result, the legislation violates section 7 of the Charter. The obligation for legal counsel to report confidential information to the CRA also violates the protection from unreasonable search and seizure in section 8 of the Charter.

… The Government of Canada has consented to a 30-day injunction suspending application of the provisions to members of the legal profession, pending a hearing on the Federation’s injunction application.

Neal Armstrong. Summary of Federation of Law Societies of Canada, “Federation challenges Income Tax Act provisions,” 12 September 2023 Press Release of the Federation under s. 237.4(4)(c).