Section 231.6

Subsection 231.6(1)

Administrative Policy

88 C.R. - "Confidentiality of Taxpayer Information" - "Foreign Based Information Documents"

S.231.6 will be applied primarily in the administration of ss.69(2) and (3).

Subsection 231.6(2) - Requirement to provide foreign-based information


Canada (Attorney General) v. Chad, 2018 FC 319

Minister required to provide material in support of requirement

Federal Court Rule 317 provides that “A party may request material relevant to an application that is in the possession of a tribunal [e.g., CRA] whose order is the subject of the application….” The taxpayer requested material relevant to its requested order that CRA requirements for information pursuant to ss. 231.1 and 231.6 be set aside on the basis that they were invalid or overly broad. CRA provided material, but in redacted form, and sought an order pursuant to s. 37 of the Canada Evidence Act to justify this redaction based on full disclosure being injurious to the public interest. The only support provided for this request was a certificate issued by the Director General of the International and Large Business Directorate baldly asserting that such disclosure could be used to circumvent ongoing audit operations.

Noël J essentially indicated that he would not be doing his job as a judge if he simply took CRA’s word for it rather than reviewing the unredacted material himself on an ex parte basis, and so ordered. He also stated that, consistently with s. 2(b) of the Charter, “open and transparent judicial proceedings are fundamental principles of the Canadian legal system,” and indicated that any redaction would need to be quite justifiable.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Canada Evidence Act - Section 37 CRA had to show and justify why it had to redact materials in order to not shed light on its audit methodology 423
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Paragraph 2(b) sun light priciple applied to require review of CRA redactions 303

Merko v. MNR, 90 DTC 6643 (FCTD)

Cullen J. rejected an argument that the demand for information may only be issued in the course of assessing or reassessing the taxpayer.

Administrative Policy

89 C.R. - Q.27

s. 231.6 is not restricted to taxation years ending after its coming into force on 13 September 1988.


David H. Sohmer, "The IRS and CRA vs UBS: Will disclosures be voluntary", The Canadian Taxpayer, Vol. XXXI, No. 1, January 1, 2009, p. 1.

Subsection 231.6(5) - Powers on review


Soft-Moc Inc. v. Canada (National Revenue), 2013 DTC 5096 [at 5879], 2013 FC 291, briefly aff'd 2014 DTC 5025 [at 6659], 2014 FCA 10

threshold for relevance and reasonableness is low

In the execution of a transfer pricing audit ("TPA"), the Minister served a s. 231.6(2) Requirement on the taxpayer relating to four corporate siblings in the Bahamas, which had charged fees to the taxpayer. The taxpayer's response to the Requirement omitted certain information, claiming that it was confidential or proprietary in nature, or that it would hurt the siblings' competitive advantage. The information withheld included organizational information about the siblings (such as minute books and personnel charts), the names of employees or external contractors that the sibling employed, and whether the siblings had provided services to other arm's length or non-arm's length customers.

Russell J dismissed the taxpayer's application for review under s. 231.6(5). The standard of review was reasonableness (paras. 15-18), and the Requirement was reasonable. Russel J stated (at paras. 79, 82):

The Minister seeks specific information related to those payments [to the siblings] to determine whether the services were performed in the Bahamas or Canada and, if in the Bahamas, how the services were provided, and to determine the appropriate transfer pricing methodology to be applied so that the Minister can ascertain whether the transfer price paid was an arms-length transfer. In my view, the information sought from the Applicant is necessary to make these determinations and to verify information that has already been provided.


The documents requested in the Requirement need to be both relevant and reasonable, but the cases say that the threshold is low... .

The taxpayer suggested that there were less invasive methods of getting the information, such as interviewing the taxpayer's controlling shareholder (who held 90% of the taxpayer's shares, directly and indirectly), but this would not give CRA the objective confirmation needed to complete the TPA (para. 84). As to whether providing the information would be costly or destroy the firms' competitive advantage, no evidence had been offered.

Fidelity Investments Canada Ltd. v. Canada (Canada Revenue Agency), 2006 DTC 6360, 2006 FC 551

The financial statements of affiliated U.S. companies of the taxpayer (being a company to which the taxpayer paid advisory fees, and a parent company) were relevant to an audit of the Minister, and there was no evidence to suggest that the Minister was engaged in a "fishing trip". The taxpayer's application for judicial review was dismissed.

Saipem Luxembourg S.A. v. Canada (Customs and Revenue Agency), 2005 DTC 5348, 2005 FCA 218

A requirement issued to the appellant to produce for the Agency's inspection the whole of its corporate records for two fiscal years (during which the appellant had employed one of its vessels in Canadian waters) was upheld. Although in enacting the reasonableness requirement in s. 231.6(5) "Parliament intended that a notice of requirement in respect of a foreign-based document must not only relate to a document which is relevant to the administration and enforcement of the Act but that it must also not be unreasonable" (p. 5354), here the requirement was not unreasonable in light of the Agency's wish to conduct an audit, which required it to be able to determine for itself that various books and records were not relevant to the appellant's Canadian tax liability.

European Marine Contractors Ltd. v. Canada (Customs and Revenue Agency), 2004 DTC 6070, 2004 FC 114

After dismissing the taxpayer's application for review of a requirement based on its allegation that the requirement included information and documents which might have no link to the determination of its liability for Canadian taxes, Rouleau J. stated (at p. 6072) that "the test to be applied is not whether the information requested will be relevant in determining the applicant's Canadian tax liability, but rather whether the information is relevant to the administration of the Act".

Subsection 231.6(8) - Consequence of failure


Glaxo Smithkline Inc. v. The Queen, 2003 DTC 918 (TCC)

The taxpayer failed to respond to a requirement to produce a range of foreign-based documents for its own reasons, or those of its parent, that were unrelated to the audit taking place.

After noting (at p. 924) that where paragraph 2(e) of the Bill of Rights (Canada) had been infringed, "the remedies that may be applied ... must be limited to that which is required in order to remedy a breach arising out of the specific facts of the case before the Court" rather than giving rise to a declaration of invalidity of the offending legislation, and after noting that there was no issue of the taxpayer here having reasonable cause for its failure to produce, Bowie T.C.J. made an order prohibiting the taxpayer from introducing any foreign-based information covered by the demand otherwise than as rebuttal evidence, or in cross-examination, and only with leave of the trial judge. The exception was needed to address concerns that if a blanket prohibition were made, a breach of the principles of fundamental justice might occur if the Crown adduced part of the evidence covered by a prohibition selectively.