Section 289

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.

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).”

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.

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.