Section 289

Cases

MNR v. Paypal Canada Co., Docket T-564-17 (FCTD), 10 November 2017

authorization to demand transaction summaries for the PayPal business account users

Gascon J granted an authorization for CRA to issue a requirement under ITA s. 231.2 and ETA s. 289 on Paypal Canada to disclose the names and addresses (etc.) of corporations and individuals holding a business account with PayPal that had used PayPal's online payment platform in the course of their commercial activities during the period from January 2014 to date, and to provide the total number and value of payments received and made for those years. He stated that "the expectation of privacy with respect to business records … is very low" and that "the information sought … is required in the context of verification activities undertaken … to determine whether the Unnamed Persons have filed their required tax returns."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) all Paypal business account dollar volumes and names required to be disclosed 212

Piersanti v. Canada, 2014 FCA 243

propriety of evidence collection for criminal purposes is irrelevant to its admissibility in tax appeals

The taxpayer had been convicted of over 30 GST-related offences. In the course of appealing the related reassessments, she moved, on Charter grounds, to exclude from evidence any information the Minister obtained from Requests for Information, arguing that the RFIs were made in the course of a criminal investigation.

The trial judge dismissed the taxpayer's motion, finding that the situation involved a concurrent criminal investigation and audit. Trudel JA further added (at para. 9):

The Judge's legal finding accords with Jarvis and with the self-assessment and the self-reporting nature of the income tax regime. Whether the CRA could properly use such documents to prosecute the appellant for criminal offences under the ETA is irrelevant to the current civil proceedings.

In any event, even if the taxpayer were correct that her rights were breached, it was "at best a technical breach" which did not call for a remedy under s. 24(2) of the Charter (para. 9).

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 propriety of evidence collection for criminal purposes is irrelevant to its admissibility in tax appeals 173
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) propriety of evidence collection for criminal purposes is irrelevant to its admissibility in tax appeals 173

Subsection 289(1)

Cases

Canada (Minister of National Revenue) v. Les Développements Béarence Inc., 2019 FC 22

no requirement to provide information in reformatted form

The taxpayer (Béarence) had failed to comply with an order of the Federal Court requiring it to provide, within five days, an Excel file containing all the daily transactions for its 2012 to 2015 years. In finding that Béarence could not now be found to be in contempt of court, Bell J accepted Béarence’s submission that CRA already had available to it all the information it needed to perform its audit and stated (at para. 18, TaxInterpretations translation):

[N]either the CRA nor this Court can impose the format in which this information must be provided to the CRA, as all the necessary information has already been provided.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(4) CRA cannot require a taxpayer to reformat its information for CRA’s reading convenience 312
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) no obligation to reformat previously-provided information 146

See Also

Ghermezian v. Canada (Attorney General), 2020 FC 1137

no need to name persons if known, and no judicial authorization required re unnamed persons not being investigated/can also be accompanied by demands for foreign-based info

In relation to five requirements for information (“RFIs”) issued pursuant to ITA s. 231.2(1) to four resident individuals and a corporation, Southcott J found:

  • Although the RFIs themselves did not name all the particular parties that the Minister was investigating, this was acceptable since the requirement to first seek judicial authorization under s. 231.2(3) before issuing the RFIs to “unnamed persons” meant only that such persons were “unknown to the Minister” rather than being “unnamed in the RFI” (paras. 34).
  • Furthermore, “the unnamed persons provisions are not engaged where a requirement seeks information related to an unnamed person that is not the subject of the Minister’s investigation” (para. 80).
  • Although he was not convinced (para. 100) “that the statutory scheme of the ITA permits the Minister to require production of foreign-based information through s 231.2(1),” it was acceptable to issue requirements under both ss. 231.2 and 231.6 with it to be sorted out later which of the requested information was foreign-based information that was subject to the limitations in s. 231.6 rather than being subject to a potential compliance order under s. 231.7 (for non-foreign based information).
  • It was acceptable for some of the RFIs to seek material dating back 21 years.
  • “[T]he ITA does not require that the party from whom the information is sought be given any details as to the purpose of the requirement” (para. 152).
  • An RFI request for “any additional information or explanations that are relevant in determining whether or not the rules of former section 94 of the Act (for taxation years before 2007) applies to the Royce and Regent Trusts in respect of the transaction described in the background of this query” (para. 160) was too vague to permit a proper response and needed to be redone.
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) boundaries between ss. 231.2 and 231.6/no need to name persons if known, and s. 231.2(3) not engaged where information sought re an unnamed person not being investigated 661
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) no need to name persons if known, and s. 231.2(3) not engaged where the unnamed person are not investigated 113

Subsection 289(3)

Cases

Roofmart Ontario Inc. v. Canada (National Revenue), 2020 FCA 85

ascertainable group could contain an unspecified or large number of accounts

Roofmart, a large supplier of roofing materials to residential and commercial contractors in Ontario, unsuccessfully appealed the Federal Court’s granting of an application by the Minister under s. ITA 231.2(3) and ETA s. 289(3) for Roofmart to disclose various particulars for all of its customers who in the past 4 ½ years had made purchases of construction materials from Roofmart exceeding specified dollar thresholds.

In rejecting Roofmart’s reliance on the statement in Hydro-Québec that "[w]hen the group is generic and has no connection to the ITA, and information can be requested outside of the scope of the ITA (such as identifying the business clients of a public utility) there is no longer any limit on the fishing expedition," Rennie JA stated (at para 37) that this “passage is not a legal test but analysis of whether, on the facts of that case, there was an ‘ascertainable group’ and whether the information was required for the purposes of verifying compliance,” and that ”the suggestion in the reasons that the information sought was available through other means and therefore could not be obtained through a UPR [unnamed person requirement] is inconsistent with this Court’s jurisprudence, and ought not to be followed.”

He further stated (at para. 39) that the “fact that the UPR may target an unspecified or large number of accounts or that a significant amount of financial information may be captured does not affect its validity,” and (at para. 45) that “GMREB established that a pending or existing tax audit of a particular individual is not a precondition to the exercise of power under subsection 231.2(3).”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) signing of application by Crown counsel was sufficient to establish that it was brought by the Minister 298
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) - Paragraph 231.2(3)(a) Hydro-Québec regarding limitations on unnamed person requirements (UPRs) “ought not to be followed” 498

Canada (National Revenue) v. Roofmart Ontario Inc., 2019 FC 506, aff'd 2020 FCA 85

requirement to show all customers with significant purchases

Campbell J authorized a requirement by the Minister for Roofmart to disclose the particulars of all its customers who in any of the past 4 ½ years had made purchases of construction materials from Roofmart in excess of an annualized total of $20,000. He found that they constituted an ascertainable group, and the request was made to verity that they were meeting their ITA and ETA obligations, e.g., their return reporting requirements.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) authorization of CRA requirement for a construction material company to disclose its customers with significant purchases 253

Canada (National Revenue) v. Hydro-Québec, 2018 CF 622

commercial customers of utility were not a group relevant to determining their ETA compliance

The Minister sought judicial authorization under ITA s. 231.2(3) and ETA s. 289(3) for making a demand of Hydro-Quebec to furnish listed particulars (e.g., address for invoicing and of electricity use, late payment identification and telephone number) for all its commercial customers who were charged the regular electricity rate – so that CRA could compare this information with what it had in its own files.

Roy J declined authorization. First, he did not think that all the regular commercial customers of a utility was an “ascertainable group” as contemplated in s. 231.2(3)(a), as the defining characteristics had no discernable link to compliance with the ITA and ETA. While they were at it, why not define group members as any resident of Quebec? (para. 98)

In finding that the request also did not satisfy the s. 231.2(3)(b) requirement that it be “made to verify compliance,” he stated (at para. 79):

The particulars of the commercial customers of Hydro-Quebec are, at best, upstream from information for the audit of their compliance with the ITA.

Finally, he indicated that even if the specific s. 231.2 (and ETA) requirements had been met, he would have rejected the Minister’s submission that once such conditions were satisfied, the Court was required to issue an authorization - and have exercised his discretion against such an "intrusion in private life" (para. 96). He stated (at para. 96):

A certain form of fishing expedition is permitted, but judicial authorization, with its inherent discretion, is there to limit and temper it. To me this seems essential where a fishing expedition is of unparalleled amplitude and the requested information is remote from an audit of compliance with the Act.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(3) Hydro-Quebec not required to furnish information on its commercial customers 431