Charter (Constitution Act, 1982)

Cases

Canada Without Poverty v. AG Canada, 2018 ONSC 4147

unjustified restriction in s. 149(6.2) on public policy advocacy in support of charitable object

A registered charity devoted most of its resources to public policy advocacy with a view to ending poverty. Although this advocacy was subordinate to its poverty-reduction purpose, it nonetheless was considered by CRA to be devoting most of its activities to (non-partisan) political activities so that it was well outside the safe harbour in ITA s. 149.1(6.2) for ancillary political activities. The charity challenged this restriction on its political activities before Morgan J.

In response to the Attorney General’s argument that “the Applicant has a right to free speech, not to subsidized speech” through the ability to issue charitable receipts, Morgan J stated (at para. 43):

[T]he evidence is that the Applicant cannot function – or will have difficulty in functioning – in the absence of registered charitable status.

After concluding that s. 149.1(6.2) “violates s. 2(b) of the Charter in that it burdens the Applicant’s pursuit of public policy advocacy,” he found that the Attorney General had failed to justify this infringement under s. 1 of the Charter through failure to answer the question “why Parliament has limited political speech acts done in furtherance of accepted charitable purposes.”

He went on to make a declaration (at para. 72) that “that ss. 149.1(6.2)(a) and (b) are of no force and effect pursuant to s. 52(1) of the Constitution Act, 1982.” However, he earlier made a declaration (at para. 71) “that the phrase “charitable activities” used in s. 149.1(6.2) be read to include political activities, without quantum limitation, in furtherance of the organization’s charitable purposes.” He also stated (para. 73) that the exclusion for partisan “charitable activities” in s. 149.1(6.2)(c) remained.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 149.1 - Subsection 149.1(6.2) ss. 149.1(6.2)(a) and (b) are of no force and effect 353

Preamble

Cases

Huet v. The Queen, 95 DTC 5008 (FCTD)

With respect to a submission that the sixteen-month delay between the announcement in the November 1981 Budget of the repeal of the income averaging annuity contract provisions and the enactment of the implementing legislation was excessive and, therefore, was contrary to the rule of law, Noël J. noted that the courts only were able to determine whether an asserted parliamentary privilege (in this instance, the budget process) was necessary to the legislative body's capacity to function, and was not able to examine the content of a particular exercise of a valid privilege. Because it is well recognized that the budgetary process, and specifically the practice of making taxation measure applicable as of the date of the ministerial announcement, is well within the framework of parliamentary privilege, in this case, the particular exercise of that privilege (i.e., the sixteen-month delay) could not be challenged.

Vanguard Coatings and Chemicals Ltd. v. The Queen, 88 DTC 6374, [1988] 2 CTC 178 (FCA)

S.34 of the Excise Tax Act, which the trial judge found to give arbitrary administrative discretion to the Minister and to thus be contrary to the rule of law, was held by the Court of Appeal not to be contrary to the rule of law. However the determination by the Minister of the "fair" price of goods was quashed, because he omitted to consider relevant material.

Section 1

Cases

Solvent Petroleum Extraction Inc. v. MNR, 88 DTC 6224, [1988] 1 CTC 325 (FCTD), aff'd 89 DTC 5381 (FCA)

The search and seizure procedures described in s. 231.3 are acceptable and within the reasonable limits prescribed by law under s. 1 of the Charter.

See Also

McFadyen v. The Queen, 2000 DTC 2473 (TCC), aff'd 2003 DTC 5015 (FCA)

Former s. 250(1)(e) was not contrary to the Charter.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 4 139

Paragraph 2(a)

Cases

Schachtschneider v. The Queen, 93 DTC 5298 (FCA)

The fact that s. 118(1) at the time provided a greater benefit to an unmarried couple with a child than to a married couple with a child could not be characterized as discrimination based on religion contrary to s. 15 of the Charter; nor did it interfere with either's religious belief or practice contrary to s. 2(a) of the Charter.

O'Sullivan v. The Queen, 91 DTC 5491 (FCTD)

The taxpayer's statement of claim, which sought a reduction in his tax on the basis that part of those taxes would be used to finance abortions, did not disclose any reasonable cause of action.

Prior v. The Queen, 88 DTC 6207, [1988] 1 CTC 241 (FCTD), aff'd 89 DTC 5503 (FCA)

The taxpayer (a Quaker) who paid 10.5% of her tax liability to the Peace Tax Fund rather than to the Receiver General, was not entitled to a declaration that being required to pay the full amount of her tax liability would infringe her rights under ss.2(a) and 15 of the Charter.

Paragraph 2(b)

Cases

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

sun light priciple applied to require review of CRA redactions

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 found that to fulfil his judicial function it was necessary for him to review the unredacted material himself on an ex parte basis, and so ordered. He also stated (at paras. 13-14):

Toronto Star Newspaper Ltd v Ontario, 2005 SCC 41 [stated]:

1. In any constitutional climate, the administration of justice thrives on exposure to light — and withers under a cloud of secrecy.

2. That lesson of history is enshrined in the Canadian Charter of Rights and Freedoms. Section 2(b) of the Charter guarantees, in more comprehensive terms, freedom of communication and freedom of expression. These fundamental and closely related freedoms both depend for their vitality on public access to information of public interest. What goes on in the courts ought therefore to be, and manifestly is, of central concern to Canadians.

As Fish J explained so eloquently in Toronto Star, open and transparent judicial proceedings are fundamental principles of the Canadian legal system. However, limited exceptions to this principle are necessary for the proper functioning and integrity of our legal system ... .

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 - Income Tax Act - Section 231.6 - Subsection 231.6(2) Minister required to provide material in support of requirement 207

OPSEU v. National Citizens' Coalition, 90 DTC 6326 (Ont CA)

Different methods of taxing income from a business or employment did not place any direct restrictions on the appellants' freedom of expression under s. 2(b) or freedom of association under s. 2(d).

R. v. Reid, [1988] 3 WWR 162 (Alta. C.A.)

The requirement under s. 151 to calculate and estimate taxes owing does not breach the right to freedom of opinion.

See Also

Pakzad v. The Queen, 2017 TCC 83 (Informal Procedure)

Dagenais/Mentuck test for those seeking a publication ban

Pak...d v. The Queen, 2016 TCC 144 disallowed the deduction from the taxpayer’s employment income of expenses of what did not qualify as a business. The taxpayer brought a motion for a publication ban of the Court’s reasons for judgment on the basis that they contained personal information that would result in harm to himself, his family and the public.

Campbell J stated (at paras 9- 10):

Under the Dagenais/Mentuck test [at [1994] 3 S.C.R. 835 and [2001] 3 S.C.R. 442], courts should only grant publication bans when:

  1. such an order is necessary in order to prevent a serious risk to the proper administration of justice because reasonably alternative measures will not prevent the risk [the “Necessity Requirement”]; and
  2. the salutary effects of the publication ban outweigh the deleterious effects on the rights and interests of the parties and the public, including the effects on the right to free expression, the right of the accused to a fair and public trial, and the efficacy of the administration of justice [the “Proportionality Requirement”].

In finding that neither branch of this test was satisfied, she stated (at paras 21, 24):

[I]t appears that the Appellant’s concerns are purely personal... .

[A]llowing a ban …would detract from the public’s confidence in the integrity of the judicial system, all of which would be inconsistent with the open court principle. In a self-assessing income tax system, it is particularly pertinent that the public have access to decisions of this Court, so that they can better ascertain the state of the law, particularly as it relates to issues which directly affect their daily activities. …

Section 6

Cases

Yates v. The Queen, 2001 DTC 761 (TCC) (Informal Procedure)

Contributions paid by the taxpayer (a former resident of the U.K. and a dual citizen of Canada and the U.K.) to the U.K. Inland Revenue Department in order to maintain rights to a future old age pension in the U.K. did not qualify as non-business income taxes because the payments were made on a voluntary basis. Campbell T.C.J. quoted Lawson v. Interior Tree, Fruit and Committee of Direction, [1931] S.C.R. 357 that "A tax is a levy, enforceable by law imposed under the authority of a legislature imposed by public body and levied for a public purpose".

Campbell T.C.J. stated (at p. 766) that:

"The failure of the Act to include a deduction or tax credit for contributions to a foreign insurance plan in no way interferes with the Appellant's right to move within Canada, to leave or to pursue a livelihood here."

Section 7

Cases

Canada (National Revenue) v. Stankovic, 2018 FC 462

use of stolen data provided by French tax authorities did not violate taxpayer's Charter rights

In 2009, the French authorities obtained the Falciani List (on which an HSBC employee in Switzerland had copied account holder information) and pursuant to Art. 26 of the Canada-France Convention provided information to CRA showing inter alia that the taxpayer had a large HSBC account in Switzerland. However, the taxpayer had not reported such assets, or any interest thereon, and CRA proceeded to send three request letters in 2015 and 2016 pursuant to s 231.1(1). The taxpayer ultimately responded, but without providing any information concerning any HSBC account in Switzerland. On November 8, 2016, the Minister applied under s 231.7(1) for a compliance order.

In rejecting the taxpayer’s submission that CRA’s use of “stolen” information violated the taxpayer’s Charter rights, Russell J stated (at para. 64):

The issues raised by the Applicant on this point were addressed … by the Quebec Court of Appeal [Berger, 2016 QCCA 226]. … The Quebec Court of Appeal affirmed the Quebec Superior Court’s decision that Mr. Berger’s rights under ss 7 and 8 of the Charter were not violated by the ARQ relying on the same HSBC List as was relied on in the present case.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) a taxpayer with an unreported Swiss bank account was not yet under criminal investigation 402
Tax Topics - General Concepts - Stare Decisis Quebec CA decision relied upon 32
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(1) mere suspicion of criminal activity did not oust s. 231.1 188

Samaroo v. Canada Revenue Agency, 2018 BCSC 324

malicious prosecution breached a couple's s. 7 rights

A couple who operated a restaurant in B.C. were awarded $1.7 million in damages (including $750,000 in punitive damages) against CRA for malicious prosecution. In concluding that the prosecution was initiated by CRA, Punnett J stated that the prosecutors “relied on Mr. Kendal [the principal CRA investigator] and the CRA to gather the evidence, draft the final Information, and essentially, do charge approval.”

In finding CRA malice, he stated that the Mr. Kendall “knowingly misstated evidence essential to the proof of the actus reus despite being aware of its importance, [and] filed a misleading report knowing it would be relied upon to authorize the prosecution.”

He went on to find that, as the taxpayers’ s. 7 Charter rights had also been breached, damages would have been payable under s. 24 of the Charter if their damages had not already been recoverable in tort, stating (at para 289):

As I have found the CRA initiated the prosecution of the plaintiffs when it was wrongful to do so, their s. 7 Charter rights have been breached. Mr. Kendal suppressed exculpatory evidence from the defence, and created inculpatory evidence in an effort to secure a conviction. The CRA used the powers of the State in the form of a criminal prosecution to wrongfully and maliciously prosecute the Samaroos.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Malicious Prosecution CRA dominated prosecution and knowingly misstated evidence 577
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Subsection 24(1) malicious prosecution in breach of s. Charter rights gave rise to Charter s. 24 damages in the alternative 143

Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401

state cannot impose duties that undermine lawyer's duty of commitment to client's cause

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act required law firms to verify the identity and record the identity of clients for whom they acted as "financial intermediaries," collect and retain financial records when receiving or paying funds for purposes other than professional fees, disbursements, expenses or bail, and allowed the anti-money laundering a federal agency (FINTRAC) to make warrantless reviews of such records subject to the firm following a specified procedure for claiming solicitor-client privilege. Non-compliance was punishable by imprisonment.

The Court largely confirmed the findings below that the provisions should be variously struck (in the case of the search and seizure provisions), or read down to exclude lawyers (for record keeping etc.). The impugned provisions breached the clients' rights against unreasonable search and seizure (see summary under Charter, s. 8).

The majority also found that the provisions contravened Section 7. One of the elements of a lawyer's duties is commitment to the client's cause - i.e. "ensuring that a divided loyalty does not cause the lawyer to 'soft peddle' his or her defence of a client" (para. 103, quoting Neil, 2002 SCC 70, at para. 70). Cromwell J stated (at para. 84):

We should, in my view, recognize as a principle of fundamental justice that the state cannot impose duties on lawyers that undermine their duty of commitment to their clients' causes. Subject to justification being established, it follows that the state cannot deprive someone of life, liberty or security of the person otherwise than in accordance with this principle.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity 355
Tax Topics - Income Tax Act - Section 232 - Subsection 232(1) - Solicitor-Client Privilege Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity 355

R. v. Kennedy, 2003 DTC 5413 (BCSC)

Metzger J. rejected a submission of the accused that as the Crown did not produce the original Income Tax Act but instead utilized a commercial consolidation of the Act published by CCH Canadian Limited, the accused was unable to make a full answer and defence, contrary to section 7 of the Charter.

Kaulius v. Canada, 2003 FCA 371, 2003 DTC 5644 (FCA), aff'd 2005 DTC 5538, 2005 SCC 55

Rothstein J.A., in rejecting an argument that the GAAR was contrary to section 7, stated that there was no suggestion in Gosselin v. Quebec (A.G.), 2002 SCC 84 "that section 7 is broad enough to encompass economic rights generally or, in particular, in respect of reassessments of income tax" and, in rejecting an argument that the "abuse" test in subsection 245(4) was unconstitutionally vague, stated that "subsection 245(4), having been interpreted and applied on numerous occasions by the Courts, is capable of supporting legal debate and coherent judicial interpretation".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis 102

R. v. Jarvis (2000), 193 DLR (4th) 656 (Alta CA)

All statements made by the taxpayer to Revenue Canada were not admissible given the failure of Revenue Canada to caution him as to his rights and inform him that he was under investigation for tax evasion. However, there is a distinction for section 8 purposes between oral admissions made out of compulsion and documents containing communications made before such compulsion and independently of it. Various documentary evidence did not qualify as derivative evidence which could not have been obtained, or the significance of which could not have been appreciated, but for the compelled statements of the accused. Accordingly, there was no breach of s. 7 of the Charter in obtaining such documentary evidence.

The Queen v. Gregory, 2000 DTC 6561 (FCA)

The trial judge had erred in agreeing to set down the question, as to whether s. 245 of the Act was unconstitutionally vague, without the benefit of adjudicative facts which had given rise to the application of s. 245 in the case before him.

Del Zotto v. The Queen, 97 DTC 5145 (FCTD)

An enquiry under s. 231.4 into the financial affairs of a taxpayer ("Del Zotto") did not violate s. 7 of the Charter given that Del Zotto was not subpoenaed to attend or to give evidence or produce documents at the enquiry, and that the lawyer and business executive who was served with such a subpoena did not (unlike Del Zotto) face criminal charges under the Act. Accordingly, there was no violation of the "case to meet" and "right to silence" principles.

The requirement to appear and to bring documents was not sufficiently intrusive to justify imposing the Hunter standards under the aegis of section 8 of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.4 105

Hokhold v. The Queen, 93 DTC 5339 (FCTD)

A retroactive amendment to s. 110(1)(f)(iii) of the Act was not contrary to ss.7 and 15 of the Charter.

Clow v. The Queen, 92 DTC 6155 (FCTD)

The taxpayer's rights under s. 7 of the Charter were not infringed by s. 167(5)(a) of the Income Tax Act.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 167 - Subsection 167(5) 19

Chester v. The Queen, 92 DTC 6166 (Man QB)

The laying of tax evasion charges approximately two years after the Minister first reassessed the taxpayer for the taxation years in question was reasonable given that "evidence needed to make a tax assessment is not of the same high standard required for criminal prosecution", and the fact that investigation continued up to the time of the laying of the charges.

Tyler v. MNR, 91 DTC 5022 (FCA)

A demand under s. 231.2(1)(a) of the Act for information the disclosure of which potentially could prejudice the taxpayer in relation to charges which had previously been brought against him under the Narcotics Act was contrary to section 7 of the Charter given that there was no prohibition against Revenue Canada communicating the information obtained to the police.

462657 Ontario Ltd. v. MNR, 89 DTC 5445 (FCTD)

Revenue Canada officials obtained a warrant to search the residence of the appellant and then, six months later, obtained an appointment for a hearing pursuant to s. 231.4(2). An application to quash the hearing was dismissed, because the taxpayer had made no specific claim to immunity in respect of any specific question, and had not shown any basis upon which any answer might tend to inciminate him with respect to any specific criminal offence.

With respect to s. 8 of the Charter, no search or seizure was involved, and the procedure under s. 231.4 was not unreasonable.

R. v. McCall, 85 DTC 5448, [1986] 1 CTC 23 (B.C. Prov. Ct.)

Where the Department of National Revenue had acted in gross disregard of the rights of the accused, the proceedings against the accused were stayed, for to permit the prosecution to proceed would not be in accordance with fundamental principles of justice.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 evidence inadmissible 24

Spencer v. R., 85 DTC 5446, [1985] 2 CTC 310 (SCC)

S.7 cannot be relied upon where infringement of the individual's liberty or security, if any, does not result from the operation of Canadian law, but solely from the operation of Bahamian law in the Bahamas.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 41

See Also

Leeper v. The Queen, 2015 DTC 1115 [at 733], 2015 TCC 82 (Informal Procedure)

unavailability of tax credit for natural cancer remedies did not infringe the taxpayer's s. 7 rights

It was not discriminatory under the Charter to deny medical expense tax credits for natural cancer remedies. Denying a tax credit did not prevent the taxpayer from obtaining the natural remedies, except perhaps by increasing the economic burden - but economic rights are not protected under s. 7 (para. 21).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118 - 118(2) - 118(2)(n) supplements, vitamins and herbs not eligible 46
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Subsection 15(1) non-creditability of natural cancer remedies not discriminatory 47

Section 8

Cases

Bauer v. Canada, 2018 FCA 62

SI investigation did not preclude issuing s. 231.2 requirement

The CRA special investigations division issued s. 231.2 requirements to two banks to get the taxpayer’s bank statements, and used these to assess him for over $5M a year in unreported business income. The taxpayer’s pleadings in the Tax Court included the assertion that, since he was under investigation at the time that the requirements were issued, the information thereby obtained was inadmissible as his s. 8 Charter rights had been infringed.

In confirming that the Tax Court had correctly struck out this pleading, Webb JA stated (at paras. 14, 17):

While using requirements under section 231.2 of the ITA to obtain information or documents after an investigation has commenced may result in that information or those documents not being admissible in a proceeding related to the prosecution of offences under section 239 of the ITA, it does not preclude that information or documents from being admissible in a Tax Court of Canada proceeding where the issue is the validity of an assessment issued under the ITA. …

[T]he CRA’s power to issue requirements under section 231.2 of the ITA to obtain information or documents that will be used for the administrative purpose of reassessing a taxpayer is not suspended by the commencement of an investigation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) CRA could constitutionally issue a s. 231.2 requirement to the taxpayer’s bank during a Special Investigations review 349

Brochu v. Agence du revenu du Québec, 2018 QCCS 722

requirement for information was disguised seizure contrary to s. 8

The Sherbrooke police seized $1.4M in cash and jewels, along with guns, of the plaintiff (“Brochu”), who had “underworld dealings.” The ARQ then arrived at the same premises (his residence) at 10 p.m. and served him with a requirement pursuant to the Quebec equivalent of ITA s. 231.2 to produce a wide range of documents “immediately,” and then carted away 13 boxes of documents. Before finding that this requirement was a disguised seizure made without judicial authorization, and awarding Brochu $10,000 in damages for “trouble, vexation and inconvenience,” as well as $100,000 in punitive damages “in order to make the ARQ and its auditors understand that ‘the end does not justify the means’ (para. 201),” Villeneuve JCS stated (at paras. 97-99, 120-121)

[W]hen the ARQ required that Brochu provide documents “immediately,” it infringed the spirit of the TAA as it provided absolutely no period in which the latter could comply, and furthermore imposed its ultimatum in a place serving as a taxpayer’s residence.

The absence of any period within which to produce by itself rendered the Requirements abusive.

Furthermore, the impressive quantity of particulars and documents demanded of Brochu rendered it impossible to respond immediately, particularly when taking into account that the Requirements extended to five companies as well as the personal affairs of Brochu over a period of almost 15 years. …

[A] requirement certainly cannot be used to disguise a seizure made without judicial authorization.

In such circumstances, section 8 of the Charter … was infringed by the ARQ… .

Although the ARQ acted hastily because it was concerned about the destruction of evidence, the correct remedy for this was an Anton Pillar order, which required judicial authorization (none was obtained)

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) a requirement to provide documents “immediately” was contrary to the Quebec equivalent of s. 231.2 484

Revcon Oilfield Constructions Incorporated v. Canada (National Revenue), 2017 FCA 22

s. 231.7 read down, not invalidated, by Thompson/Chambre des notaires

Stratas JA found that Chambre des notaires and Thompson did not invalidate s. 231.7, and that there the Supreme Court instead had merely “read down section 231.7 to exclude lawyers and notaries,” so that the taxpayer was required to disclose materials which were not covered by solicitor-client privilege.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.7 - Subsection 231.7(1) s. 231.7 continues to apply to non-lawyers 164

Uber Canada Inc. v. ARQ, 2016 QCCS 2158, aff'd 2016 QCCA 1303

seizure of computers containing personal information was the only practicable approach

On a search of a Montreal office of Uber Canada (authorized pursuant to s. 40 of the Quebec Tax Administration Act), 74 smart phones and 14 computers, which included personal information, were seized. Uber Canada argued before Cournoyer JCS (as quoted at para. 242) that "by authorizing Revenu Québec to take the Applicant’s computers and smartphone without contents limitations, the warrants simply disregarded the constitutional requirement to authorize only the seizures of things that may afford evidence of alleged offences.”

Cournoyer JCS stated (at para. 282, TI translation):

The Court shares the analysis of Professor Kerr that there does not exist any realistic alternative to the complete seizure of the digital devices and their subsequent search - which inevitably will lead to access to information which was not within the scope of the search warrant.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 240 - Subsection 240(1.1) Uber drivers, as operators of “taxi” businesses, likely were required to register for QST 268
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) it was reasonable for ARQ on a search to seize smart phones and laptops to make subsequent complete copies 416
Tax Topics - General Concepts - Illegality Uber drivers' breach of provincial registration statute did not justify their failure to register for QST purposes 226

Canada (Attorney General) v. Chambre des notaires du Québec, 2016 SCC 20, [2016] 1 S.C.R. 336

s.231.2 demands for information do not apply to lawyers

Notaries practising law in Quebec received requirements under s. 231.2 to provide documents or information relating to clients for tax collection or audit purposes. Wagner and Gason JJ found (at paras. 87, 94):

[T]he requirement scheme in the ITA infringes s. 8 of the Charter and must be declared to be unconstitutional insofar as it applies to notaries and lawyers in Quebec.

…[T]he exception for a lawyer’s accounting records set out in the definition of “solicitor‑client privilege” in s. 232(1) of the ITA is unconstitutional and invalid. The manner in which it limits the scope of professional secrecy is not absolutely necessary to achieve the purposes of the ITA, which means that the exception is contrary to s. 8 of the Charter.

In support of the first conclusion, they stated (at para. 44):

The defects in question are that the client is given no notice of the requirement, that an inappropriate burden is placed solely on the notary or lawyer concerned, that compelling disclosure of the information being sought is not absolutely necessary and that no measures have been taken to help mitigate the impairment of professional secrecy.

Respecting the absence of reasonable mitigation measures, they noted (at para. 68) that it was helpful to their analysis that the ARQ and the Chambre des notaires had reached a settlement in which it was agreed that, before issuing a formal demand, the ARQ would try to obtain the information from various public records or by requesting the information from the taxpayer or another third party to the contract, that the permission of the taxpayer would be sought if the ARQ determined that only a lawyer or notary had the information, that if the ARQ determined that professional secrecy did not apply, a court order would be sought, that any formal demand would specify the information or documents covered, and that a notary who invoked professional secrecy in good faith would not be prosecuted.

Respecting the impermissible breadth of the exception in s. 232(1) for accounting records, they noted (at para. 72) that “even where accounting information includes no description of work, it may in itself, if disclosed, reveal confidential and privileged information,” so that, for example, client names and even the amount of fees may be protected.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) s. 231.2 does not apply to lawyers 123
Tax Topics - Income Tax Act - Section 232 - Subsection 232(1) - Solicitor-Client Privilege exception for accounting records is unconstituional 134

Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7, [2015] 1 S.C.R. 401

Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act required law firms to verify the identity and record the identity of clients for whom they acted as "financial intermediaries," collect and retain financial records when receiving or paying funds for purposes other than professional fees, disbursements, expenses or bail, and allowed the anti-money laundering a federal agency (FINTRAC) to make warrantless reviews of such records subject to the firm following a specified procedure for claiming solicitor-client privilege.

The Court largely confirmed the findings below that the provisions should be variously struck (in the case of the search and seizure provisions), or read down to exclude lawyers (for record keeping etc.). The impugned provisions breached the clients' rights against unreasonable search and seizure. The statutory accommodations for privilege in the Act were less robust than conventional solicitor-client privilege. For example, privilege could be lost if not asserted on a timely basis, which was found in Lavallee to be unacceptable. The Minister argued that Lavallee applied where law enforcement officials were seeking evidence of criminal wrongdoing, and not in connection with a regulatory compliance regime. The immediate problem with this position was that the Act was expressly aimed at finding criminal wrongdoing, and threatened imprisonment of lawyers for non-compliance.

Moreover, the bar in Lavallee against erosions of privilege was not confined to a criminal context. Cromwell J stated (at para. 38) "the reasonable expectation of privacy in relation to communications subject to solicitor-client privilege is invariably high, regardless of the context," and quoted with approval the statement of Arbour J in Lavalee that "all information protected by the solicitor-client privilege is out of reach for the state."

He further noted (at para. 55) that one of the objectionable features of the procedure for claiming privilege under the Act was that it had to be asserted on behalf of a named client (stating that "the name of the client may itself be (although is not always) subject to solicitor-client privilege") and further stated that "the same ... may be said about the obligation of the lawyer under s. 64(10) to provide the authorities with the latest known address for the client."

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 state cannot impose duties that undermine lawyer's duty of commitment to client's cause 248
Tax Topics - Income Tax Act - Section 232 - Subsection 232(1) - Solicitor-Client Privilege Charter protection against statutory erosion of privilege extends beyond a criminal context and includes client identity 355

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 - Excise Tax Act - Section 289 propriety of evidence collection for criminal purposes is irrelevant to its admissibility in tax appeals 151
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 151

Canada (National Revenue) v. Jakabfy, 2013 DTC 5128 [at 6198], 2013 FC 706

not re legal advice

The respondent ("Jakabfy") was a lawyer who received a Request from the Minister for information relating to his clients' sale of a property. Claiming solicitor-client privilege pursuant to his clients' instructions, he refused to disclose the documents without a court order. Zinn J found that the documents in question did not relate to legal advice and therefore granted the Minister's requested order, but agreed with Jakabfy that he should not have costs awarded against him.

In the course of his reasons, Zinn J stated:

Counsel for the Minister ... brought to our attention the decision of the Québec Superiour Court in Chambre des notaires du Québec c. Canada (Precureur général), 2010 QCCS 4215, [2010 JQ 8868] which held that sections 231.2 and 231.7 and the definition of "solicitor-client privilege" in subsection 232(1) of the Income Tax Act were contrary to sections 7 and 8 of the Canadian Charter of Rights and Freedoms and are of no force and effect as against Quebec notaries and lawyers with respect to documents and information protected by "professional secrecy." That decision is under appeal.

This Court declines to follow that decision for three reasons. First, a decision of the Québec Superior Court is not binding on this Court. Second, the decision appears to rely heavily on the professional obligations of notaries and lawyers set out in their respective Codes of Professional Conduct, which is not applicable to the Respondent. Third, and most importantly, there is no "professional secrecy" or privilege attaching to the requested documents and information in Ontario jurisprudence.

The Queen v. Anderson, 2003 DTC 5483 (Sask CA)

audit v. criminal investigation

The trial judge had erred in excluding evidence obtained by Revenue Canada given that the auditors were not shown to have obtained their information in the course of an investigation rather than an audit.

R. v. Dial Drugstores Ltd., 2003 DTC 5206 (Ont. Sup. Ct. J.)

mere suspicion

An investigation by CCRA of the taxpayer was not transmuted into a criminal investigation until the auditor met with Special Investigations and referred the file to them for their consideration. Reilly J. noted (at p. 5219) that:

"The mere fact that the audit was provoked as a result of suspicion of non-compliance does not turn it into an investigation to determine penal liability."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) 82

Kligman v. MNR, 2003 DTC 5100 (FCTD)

minimal corporate privacy expectation

The applicants received letters entitled Requirement to Provide Information and Documents With Respect to Donations Made For Charitable Organizations

The record as a whole including testimony of CCRA investigators indicated that the predominant purpose of the investigation giving rise to the Requirements was prosecution of the applicants for tax evasion. The Requirements issued to the individual applicants were ordered to be quashed, whereas those issued to the corporate applicants were upheld given that the privacy interests of corporate entities are minimal as compared with those of individuals.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) 87

Lavallee, Rackel & Heintz v. Canada (Attorney General); White, Ottenheimer & Baker v. Canada (Attorney General); R. v. Fink, 2002 DTC 7267, 2002 SCC 61, [2002] 3 S.C.R. 209

unconstitutional lack of privilege safeguards

In addition to other defects that potentially could be cured by a modest judicial redrafting of the provision, section 488.1 of the Criminal Code was fundamentally flawed in that it failed to ensure that clients were given a reasonable opportunity to exercise their constitutional prerogative to assert or waive their privilege but, instead, established a procedure whereby the privilege could be lost if the lawyers whose law offices were being searched did not advance claims of solicitor-client privilege on a timely basis. Arbour J stated (at para. 24):

It is critical to emphasize here that all information protected by the solicitor-client privilege is out of reach for the state. It cannot be forcibly discovered or disclosed and it is inadmissible in court. It is the privilege of the client and the lawyer acts as a gatekeeper, ethically bound to protect the privileged information that belongs to his or her client. Therefore, any privileged information acquired by the state without the consent of the privilege holder is information that the state is not entitled to as a rule of fundamental justice.

Accordingly, the proper course of action was to declare section 488.1 unconstitutional and strike it down pursuant to section 52 of the Constitution Act, 1982.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 232 - Subsection 232(3) unconstitutional lack of privilege safeguards 200

The Queen v. Norwood, 2001 DTC 5111 (FCA)

surreptitious photocopying

The photocopying by a Revenue Canada auditor of notes made by an accountant in his interview with the taxpayer which the auditor obtained from an empty office at the time the accountant was out of town was not authorized by s. 231.1(1). Sharlow J.A. stated (at p. 5114) that "one might question whether an auditor can be said to have exercised his powers of investigation at a 'reasonable time' if he takes a document from an accountant's private office when he knows the accountant is out of town". Furthermore, because the taxpayer had a reasonable expectation of privacy (notwithstanding that "a taxpayer's expectation of privacy in an accountant's notes recording personal information are at the low end of the scale"), there was a breach of the taxpayer's rights under s. 8 of the Charter. The appropriate remedy under s. 24 of the Charter was exclusion of the notes as evidence given that the notes were not relied upon to justify the reassessments of the taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) 132

R. v. Jarvis (2000), 193 DLR (4th) 657 (Alta CA)

audit v. criminal investigation

Although Revenue Canada investigators improperly had not informed the taxpayer that he was being investigated for tax evasion, this failure in their evidence-gathering process did not boot-strap Revenue Canada into a position where they obtained a search warrant that would otherwise be unobtainable. In particular, the documents pre-existed the improper audit investigation, they were all readily discoverable, they were real evidence, they were reliable and formed part of a self-reporting scheme. Accordingly, there was no s. 8 breach.

Gernhart v. The Queen, 99 DTC 5749 (FCA)

public disclosure was seizure

The taxpayer successfully argued that because the effect of s. 176(1) was to make their tax return publicly available, such requirement entailed an unreasonable seizure contrary to s. 8 of the Charter. S.176(1) was struck down in its entirety.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 176 - Subsection 176(1) 37

R. v. Anderson, 99 DTC 5536 (Sask. P. Ct.)

exclusion of collateral evidence

The evidence collected by Revenue Canada auditors respecting the taxpayer was excluded because, from the start, the evidence had been gathered in connection with an investigation by Revenue Canada of the underground economy including, in this case, the sale of used cars.

The Queen v. Warawa, 98 DTC 6471 (Alta. Q.B.)

criminal investigation not disclosed

Revenue Canada was unable to use in prosecution documents and statements that Special Investigations had obtained without letting the accused know (and, in fact, misleading him in this regard) that he was the subject of a criminal investigation rather than an ordinary audit.

The Queen v. Kloster, 98 DTC 6258 (Prov. Ct. B.C.)

taking of bank records breached privacy

The use of s. 231.1 to obtain bank records and records of a solicitor who had acted for the accused breached the reasonable expectations of privacy of the accused. Bagnall J. found that the use of the evidence so obtained without judicial authorization was not permitted under s. 24(2) of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) 50

Deloitte & Touche Inc., Trustee of Vancouver Trademark Inc. v. Attorney General of Canada, 97 DTC 5520 (FCTD)

working papers not protected

A demand made pursuant to s. 231.1(1), to a trustee in bankruptcy for working papers that it had prepared to analyze irregularities between the corporation in question and its shareholders did not violate the Charter.

Del Zotto v. The Queen, 97 DTC 5328 (FCA)

s. 231.4 violated Charter

S.231.4 and subpoenas issued under it were of no force and effect because s. 231.4 violated s. 8 of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.4 - Subsection 231.4(1) 19

R. v. Harris, 95 DTC 5653 (BCSC)

SI demand was criminal

Because the purpose of the Special Enforcement Branch of Revenue Canada Special Investigations was to cause maximum disruption to criminal operations rather than collecting revenue, a demand made by the Special Investigations Branch pursuant to s. 231.2(1) of the Act had a criminal aspect rather than a purely regulatory or administrative aspect. Accordingly, the accused could not be charged with failure to comply with the demand because it, in turn, was based on information that had been obtained from the RCMP Drug Squad in contravention of the accused's rights under s. 8 of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 93

Baron v. Canada, 93 DTC 5018, [1993] 1 S.C.R. 416

invalid removal of judicial discretion

Because s. 231.3 removed the residual discretion of the issuing judge to refuse to issue a search warrant in the proper circumstances, notwithstanding that the statutory criteria for its issuance had been met, it violated s. 8 of the Charter and, therefore, was of no force or effect, and search warrants issued and executed pursuant to it were invalid.

Carlini Bros. Body Shop Ltd. v. The Queen, 92 DTC 6543 (Ont. Ct. J. - G.D.)

s. 231.3 invalid

Brockenshire J. was persuaded by the decision of the Federal Court of Appeal in the Baron decision that s. 231.3 of the Act was invalid, and that therefore, search warrants issued thereunder were also invalid.

McKinlay Transport Ltd. v. The Queen, 90 DTC 6243 (SCC)

no unreasonable intrusion on privacy

After finding that a demand under former s. 231(3) would constitute a "seizure" for purposes of s. 8 of the Charter because the compelled production of documents pursuant to s. 231(3) very well could extend to information and documents to which the taxpayer had a privacy interest in need of protection under s. 8 of the Charter, Wilson J. went on to find that such a seizure did not entail an unreasonable intrusion on the taxpayer's privacy interest. She stated (at p. 6251):

"s.231(3) provides the least intrusive means by which effective monitoring of compliance with the Income Tax Act can be effected. It involves no invasion of a taxpayer's home or business premises. It simply calls for the production of records which may be relevant to the filing of an income tax return. A taxpayer's privacy interest with regard to these documents vis-á-vis the Minister is relatively low."

Kourtessis and Hellenic Import-Export Co. Ltd. v. MNR, 89 DTC 5464 (BCCA), aff'd 93 DTC 5137, [1993] 2 S.C.R. 53

s. 231.3 OK

The procedure in s. 231.3 is consistent with s. 8 of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) 55

Solvent Petroleum Extraction Inc. v. The Queen, 89 DTC 5381 (FCA)

s. 231(4) fixed in s. 231.3

s.231.3 meets the deficiencies previously found in the search and seizure procedure under the former s. 231(4).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) 87

F.K. Clayton Group Ltd. v. MNR, 88 DTC 6202, [1988] 1 CTC 353 (FCA)

in-audit seizure provision was void

S. 231(1)(d) was contrary to the Charter because it did not provide for prior judicial authorization, there was no objective standard against which to test the validity of the seizure, only the appearance of a violation was required to justify a seizure, there was too broad a category of documents that could be seized, there was no limitation of the section to situations of urgency and there was no opportunity to contest the seizure before it took place.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) 56

R. v. James; Dzagic v. R., 86 DTC 6432, [1986] 2 CTC 288 (Ont.C.A.), briefly aff'd 88 DTC 6273, [1988] 1 S.C.R. 669

Charter effective date

"S.8 of the Charter cannot be applied to a search or seizure which occurred before the coming into effect of the Charter."

R. v. Marcoux, 85 DTC 5453, [1985] 2 CTC 254 (Alta. Prov. Ct.)

3rd party seizure invalid

"The completely arbitrary and discretionary power of seizure from third parties" conferred by s. 231(3) was found to contravene s. 8. S.231(1)(d) was conceded by the Crown also to be inconsistent with s. 8 of the Charter.

Documents seized at a private residence were excluded from evidence.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 94

R. v. McCall, 85 DTC 5448, [1986] 1 CTC 23 (B.C. Prov. Ct.)

evidence inadmissible

Evidence obtained from an illegal seizure is inadmissible, regardless whether the seizure was made in good faith. Here, however, bad faith was amply demonstrated.

Stephens v. The Queen, 85 DTC 5359, [1985] 2 CTC 149 (FCTD)

The temporary lifting of writs of execution under a consent order to allow for the sale of the applicant's home and to allow for the payment of the proceeds into Court, followed by the refiling of the writs, did not entail any "seizure".

Lewis v. M.N.R., 84 DTC 6550, [1984] CTC 642 (FCTD)

return of seized items

Articles improperly seized by the Crown should be returned even if they may be required as evidence in subsequent proceedings.

MNR v. Kruger Inc., 84 DTC 6478, [1984] CTC 506 (FCA)

no link betweeen seizure right and offence

S. 231(4) contravenes the right of the taxpayer to be secure against unreasonable search or seizure because it confers "on the Minister, when he has grounds to believe that one particular offence has been committed, the power to authorize a general search and seizure relating to the violation of any of the provisions of the Income Tax Act or the Regulations." The Court could not "accept the general proposition that the mere fact that a taxpayer has, at a particular time, committed an offence ... however trifling that offence, affords sufficient justification for the general power of search and seizure conferred by subsection 231(4)."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) 131

Hunter v. Southam Inc., 84 DTC 6467 (SCC)

prior judicial authorization required

Since a purpose of s. 8 is to protect individuals from unjustified state intrusions upon their privacy, s. 8 requires a means of preventing unjustified searches before they happen, and thus in general requires a system of prior authorization, not one of subsequent validation. The person authorizing the search must be able to act in a judicial capacity in applying what must be an objective standard embodied in legislation as to what must be established in order for the interests of the individual to give way to those of the state.

Re Charron, 84 DTC 6241, [1984] CTC 237 (FCTD)

"It is not unreasonable to garnishee assets as a result of the filing of a certificate under Section [223] of the Act for income tax assessments."

The Queen v. Roth, 84 DTC 6181, [1984] CTC 185 (SCO)

"The powers and procedures set forth in section 231 of the Act are necessary and appropriate for the due functioning of the Taxation system in effect in Canada. They have not become unnecessary or inappropriate by virtue of the enactment of the Charter and they are demonstrably justified in a free and democratic society."

McLeod v. MNR, 83 DTC 5112, [1983] CTC 168 (FCTD)

The seizure of the taxpayer's shares in a private company under a writ of fi. fa. as security for what, under the operation of ss.222 and 223(2), was a debt owing to the Crown in respect of reassessed taxes, would not constitute an unreasonable seizure, it being expected that Revenue Canada will not maliciously, or unnecessarily, sell shares or other assets of the taxpayer.

See Also

R. v. BT Céramiques Inc., 2017 QCCS 4262

mere suspicion of tax evasion and corrupting CRA officials is insufficient to invalidate audit information

In March 2006, an official in the Montreal office of the CRA Special Investigations Division received a tip that a company (BT Céramiques) and its president (Bruno) were involved in tax evasion and had a close relationship with a senior CRA employee. The computer system showed that the returns of Bruno and BT Céramiques had stayed in the possession of the same auditor (lammarone) for three years without having been acted upon. In March 2007, a CRA manager decided to initiate an audit of two years subsequent to those previously reviewed, i.e., of the 2004-2005 years, with the audit to be performed by auditors in the Special Enforcement Program (“SEP” - whose mandate was to determine the civil liability of those engaged in criminal activities) rather than by those in the Criminal Investigations Program, who investigated tax evasion with a view to bringing charges. The audit revealed some evidence of CRA corruption (including an invoice for a kitchen counter from lammaronne) in addition to GST non-compliance by BT Céramiques. In March 2008, the file was transferred for criminal investigation, with the auditors providing some assistance in the preparation for obtaining a search warrant, with the search and seizure of documents occurring on May 6, 2008. The Court of Quebec found that the search was unconstitutional based on the Jarvis test and, as the seized evidence was to be excluded, ordered the acquittal of the appellants.

After reviewing the Jarvis criteria for determining whether the predominant purpose of the audit ending in March 2008 was to determine penal liability, and before concluding that this was not the case, so that the acquittals were annulled and the file ordered to be reviewed by a different judge, Payette JCS stated (at paras. 83, 87-88, 96, 98, TaxInterpretations translation):

When it commenced the audit [in March 2007], the CRA only had suspicions that BT Céramiques was engaged in tax evasion and that a “grand patron” in the CRA was assisting it. … Such suspicions were not the equivalent of reasonable grounds to believe that BT Céramiques and Bruno had corrupted a CRA official. …

Did the CRA possess such grounds before the transfer of the file to the SEP in April 2007? Taking her conclusions into account, the judge did not respond to this question. ...

The discovery of an invoice for a kitchen counter permitted a belief that lammarone had been placed in a situation of a conflict of interest. … [T]his did not constitute a reasonable ground to permit the CRA to obtain a search warrant or to make accusations of corruption against BT Céramiques or Bruno. …

Furthermore, the judge contrasted “auditing” and “investigation” in concluding that there was a contravention of the Jarvis principles. She often referred to this “contrast” without noting that the audit powers themselves constitute powers of investigation, and without pausing to determine if the objective of the steps she described was to establish penal liability of the respondents… .

In this case, the facts found by the judge did not permit a conclusion that the conduct of the authorities examined in its entirety gave rise to a belief that they were proceeding in a criminal investigation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) mere suspicion of tax (GST) evasion insufficient to render a penal investigation 151

9162-4676 Québec Inc. (known as Trimax) v. ARQ, 2016 QCCA 962

search of law firm must demonstrate no alternative

Hilton JCA applied the principle in Lavalee, [2002] 3 S.C.R. 209, para. 49, quoted at para. 43 - that “before searching a law office, the investigative authorities must satisfy the issuing justice that there exists no other reasonable alternative to the search” - to invalidate a search warrant that had been given to the ARQ to search a Montreal law firm’s premises for documents relating to a client who was suspected of claiming input tax refunds/credits on fictitious inputs (so that the seized documents were ordered to be returned.) The information laid before the issuing judge had not addressed any absence of an alternative solution – and Hilton JCA also chided the ARQ for failure to disclose the “material fact” that the law firm in question was acting for the client in the tax dispute with the ARQ.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.3 - Subsection 231.3(3) law firm search invalidated for failure of the information to demonstrate that there was no alternative for getting the documents 401

Morley v. The Queen, 2004 DTC 2604, 2004 TCC 280, briefly aff'd 2006 DTC 6351, 2006 FCA 171

There had been no breach of the taxpayer's Charter rights given that there was no evidence that information obtained by the tax avoidance auditor was obtained for the main purpose of carrying out a criminal investigation.

Re Belgoma Transportation Ltd. (1985), 51 OR (2d) 509 (Ont CA)

It was held that s. 45 of the Employment Standards Act (Ont.), which was similar to s. 231(1) of the Income Tax Act and which permitted an officer to enter business premises and require production for inspection and copying of certain records, did not contravene the Charter. "The standards to be applied to the reasonableness of a search or seizure and the necessity for a warrant with respect to criminal investigations cannot be the same as those to be applied to search or seizure within an administrative and regulatory context."

Statement of Claim

Statement of Claim of Hillis and Deegan against the Attorney General of Canada, filed in the Federal Court of Canada in Vancouver on 11 August 2014 (Farris, Vaughan) (statement of claim, 1.3 M).

Listed grounds. "The Plaintiffs claim:

a. a declaration that the Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act, being s. 99 and Schedule 3 of the Economic Action Plan 2014 Act, No. 1, S.C. 2014, c. 20, and ss. 263 to 269 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), collectively, the "Impugned Provisions," are ultra vires Parliament based on the Constitution Act, 1867 and of no force and effect pursuant to s. 52 of the Constitution Act, 1982;

b. in the alternative, a declaration that the Impugned Provisions do not apply to provincially regulated financial institutions on the basis of ss. 92(13) and 92(16) of the Constitution Act, 1867 and the doctrine of interjurisdictional immunity;…

e. a declaration that the Impugned Provisions unjustifiably infringe s. 8 of the Charter and are of no force and effect;

f. a declaration that the Impugned Provisions unjustifiably infringe s. 15 of the Charter and are of no force and effect;…"

Background of 1st plaintiff. "Ginny was born in the United States in 1946 to two Canadian citizens. Ginny and her parents resided in Michigan until approximately 1951, when Ginny and her parents returned to Canada. … Ginny has never worked in the United States and has never declared or paid any taxes in the United States." [2nd plaintiff somewhat similar]

S. 8 Charter allegation. "The Plaintiffs have a reasonable expectation of privacy in their Accountholder information. The Impugned Provisions breach s. 8 of the Charter in that the Impugned Provisions require or authorize Canadian Financial Institutions to collect Accountholder Information relating to US Reportable Accounts and disclose that information to Canada which will or can in turn disclose that information to the United States and its various agencies:

  1. without prior or any authorization by a neutral and impartial arbiter capable of acting judicially;
  2. without application of the reasonable and probable grounds standard or, in the alternative, without the application of any clear and articulable legal standard;
  3. without notice to the individual whose Accountholder Information is to be collected and/or disclosed;
  4. without an opportunity to be heard for the individual whose Accountholder Information is to be collected and/or disclosed;
  5. without a judicial determination of whether or not the accountholder is a US Person;…"

S. 15 Charter allegation. "The Impugned Provisions create a distinction between citizens and residents of Canada who are US Persons and those who are not. The Impugned Provisions also create a distinction between accountholders whose accounts are associated with US Person Indicia (such as a United States place of birth) and accountholders whose accounts are not associated with US Person indicia. …

The distinction created by the Impugned Provisions causes the Plaintiffs disadvantage,…These disadvantages perpetuate prejudice and stereotyping for reasons including that:

  1. US Persons living in Canada are subject to prejudicial stereotypes and treatment in Canada and the United States;…"

Section 11

Cases

Guindon v. Canada, 2015 SCC 41, [2015] 3 S.C.R. 3

ITA s. 163.2(4) penalty not criminal so that s. 11 Charter protection not engaged

The preparer's penalty under s. 163.3(4) is not a criminal penalty so that the preparer does not benefit from procedural protections under s. 11 of the Charter. Rothstein J stated that "the magnitude of penalties under s. 163.2(4) is directly tied to the objective of deterring non-compliance with the ITA" (para. 84).

See summary under s. 163.2(4).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163.2 - Subsection 163.2(1) - Culpable Conduct conduct must be at least as bad as gross negligence 102
Tax Topics - Income Tax Act - Section 163.2 - Subsection 163.2(4) penalty not criminal so that s. 11 Charter protection not engaged 330

Canada v. Guindon, 2013 DTC 5133 [at 6117], 2013 FCA 153, aff'd supra

The taxpayer provided grossly negligent opinions on a charitable donation scheme (which unbeknownst to her was a scam) and signed charitable donation receipts in connection therewith. The Minister assessed her for penalties under s. 163.2(5).

The Tax Court had found that s. 163.2 created an offence - so that the taxpayer's assessment should be vacated as she had not been given the rights guaranteed by s. 11 of the Charter. The Tax Court lacked jurisdiction to make this finding as the taxpayer had not served notice of this constitutional question on the federal and provincial Attorneys General.

Stratas JA rejected an alternative submission that the taxpayer could assert those s. 11 rights (such as proof beyond a reasonable doubt) which did not override the wording of s. 163.2 ("section 11 is not a buffet table" (para. 35)) - and went on to note that, in any event, s. 163.2 did not create an offence: the penalties under s. 163.2 are "not about condemning morally blameworthy conduct," but rather for "ensuring that this discrete regulatory and administrative field of endeavour [i.e. taxation] works properly" (para. 41).

Paragraph 11(b)

Cases

R. v. Rahey (1984), 141 A.P.R. 275 (N.S.C.A.)

The Court could "find no evidence of any real or concrete prejudice having been suffered or likely to be suffered by Mr. Rahey as a result of the trial judge's delay," and Mr. Rahey's s. 11(b) right accordingly had not been infringed.

Paragraph 11(c)

Cases

Tyler v. MNR, 89 DTC 5044 (FCTD), rev'd 91 DTC 5022 (FCA)

rev'd on other grounds 91 DTC 5022 (FCA)

There is no offence in issue in the tax audit. Therefore, s. 11(c) of the Charter has no application to a requirement for information made in an audit pursuant to s. 231.2(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 241 - Subsection 241(3) 37

Paragraph 11(d)

Cases

James v. The Queen, 84 DTC 6570, [1984] CTC 672 (S.C.O.), rev'd by 86 DTC 6432, [1986] 2 CTC 288 (Ont CA), briefly aff'd by 88 DTC 6273, [1988] 2 CTC 1, [1988] 1 S.C.R. 669

rev'd on other grounds by 86 DTC 6432, [1986] 2 CTC 288 (Ont CA), briefly aff'd by 88 DTC 6273, [1988] 2 CTC 1, [1988] 1 S.C.R. 669

It was indicated that the statement in S.244(4) that the Minister's certificate as to the day on which sufficient evidence of the occurrence of an offence came to his knowledge "is conclusive evidence thereof", is not rendered inoperative under SS.7 or 11(d) of the Charter. "The section in no way affects the substantive offence with which the accused is charged".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 244 - Subsection 244(4) 90

Re Charron, 84 DTC 6241, [1984] CTC 237 (FCTD)

S.158(2) of the Act is not contrary to s. 11(d) of the Charter. It "does not create a criminal offence but is merely a civil matter permitting a demand for payment to be made without waiting 30 days from the mailing of the Notice of Assessment."

See Also

Stanley J. Tessmer Law Corporation v. The Queen, 2013 TCC 27

The taxpayer did not collect GST on the legal fees charged to some of its clients, who were defending against criminal charges. Paris J. found that the defendants' Charter rights under s. 10(b) and 11(d) to legal counsel did not entail a right to be exempt from GST. As a law of general application, s. 165 of the Excise Tax Act (the GST charging provision) did not have a purpose of impeding a defendant's right to counsel.

If s. 165 were unconstitutional in its effects, the onus would be on the appellant to provide an "evidentiary foundation" to show such effects. Generally, the appellant must show actual unconstitutional effects. If actual facts are not available to the appellant, the appellant may use hypotheticals, which would be accepted as true "because they could commonly arise in day-to-day life or are indisputable on their face." Finally, the taxpayer is under no such burden if the impugned legislation is unconstitutional on its face (paras. 54-56).

Paris J. found that, in the present case, the taxpayer should not be relieved of the burden of presenting "actual facts." This was irrelevant, however, because the taxpayer had failed to meet either the factual burden or the hypothetical one. The GST remittance assessments against the taxpayer were confirmed.

Paragraph 11(h)

Cases

The Queen v. Caseley, 90 DTC 6618 (P.E.I.S.C.)

Because proceedings under s. 163(2) are of an administrative nature (there being no charge, no trial, no sentence or any fine in excess of an amount calculated to compensate the Minister for the costs of an investigation), there was no violation of s. 11(h) of the Charter in bringing proceedings against the taxpayer under s. 239(1)(d) after the taxpayer had been assessed under s. 163(2).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) 63

Lavers v. Minister of Finance of B.C., 90 DTC 6017 (BCCA)

The Minister assessed the taxpayers under s. 163(2) for penalties, and shortly thereafter the taxpayers were convicted under s. 239(1). The taxpayers applied to the Supreme Court of British Columbia for an order declaring that the imposition of the penalties, in light of their previous convictions, amounted to their being punished for the same offence twice. It was held that s. 163(2) did not create an "offence", because the penalty assessments were "properly characterized as private matters of a regulatory nature - primarily intended to regulate the conduct of taxpayers with reference to their complying with the requirements" of the income tax legislation, whereas prosecutions for a violation of s. 239 "are properly characterized as criminal and penal matters intended to 'promote public order and welfare within a public sphere of activity' by deterring the public from the commission of flagrant breaches of the Income Tax Act." In addition, s. 163(2) did not impose "punitive sanctions [which] were so severe as to constitute 'a true penal consequence'." Finally, in light of the presumption that an assessment is valid and binding until an appeal court varies or vacates it, the penalties effectively constituted punishment of the taxpayers before their conviction under s. 239(1), rather than afterwards.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) 103

The Queen v. Sharma, 87 DTC 5424, [1987] 2 CTC 253 (S.C.O.)

S.11 deals only with offences that are prosecuted in a criminal or penal proceeding, and s. 163(2) penalties are not assessed in such a proceeding.

Section 12

Cases

Canada v. Guindon, 2013 DTC 5133 [at 6117], 2013 FCA 153, aff'd supra

The Court found that the taxpayer was liable for penalties under s. 163.2 for participating in the making of false statements relating to 134 taxpayers' claims for charitable tax credits.

Stratas JA stated obiter dicta that it was unlikely that s. 163.2 penalties could ever amount to cruel and unusual punishment given that s. 163.2 penalties are based on a formula that attempts to "gauge the extent to which the impugned conduct may have affected the tax system" - in this case, 50% of the amount of tax that the 134 participants sought to avoid.

Subsection 15(1)

Cases

Almadhoun v. Canada, 2018 FCA 112

immigrant status not a protected s. 15 characteristic

The appellant received a Refugee Protection Claimant Document on October 12, 2011 after arriving in Canada from Palestine with her son. On February 22, 2013, her claim was denied by the Immigration and Refugee Board, but on September 16, 2015, she was granted permanent residency on compassionate grounds and thereafter continued to reside in Canada. De Montigny JA, after confirming the Tax Court finding that the taxpayer was not entitled to the Canada child tax benefit, found that the taxpayer was not entitled to raise in the Federal Court of Appeal for the first time her argument that her failure to qualify as an “eligible individual” under the wording of the relevant CCB provision was contrary to s. 15(1) of the Charter. He then stated (at para. 28):

I am comforted in this view by the fact that the appellant’s argument appears to be devoid of any merit. I agree with the respondent that immigration status is not a personal characteristic that is immutable or changeable only at great personal cost. Unlike the prohibited grounds enumerated in subsection 15(1) of the Charter, immigration status is a characteristic that the government has a legitimate interest in expecting the person to modify. The Supreme Court has consistently recognized that non-citizens do not have an unqualified right to enter or remain in Canada, and the government has a valid interest in expecting those present in Canada to have a legal right to be here … . The jurisprudence of this Court is also very clear that immigration status is not an analogous ground for the purposes of subsection 15(1) … .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 122.6 - Eligible Individual - Paragraph (e) unsuccessful refugee claimant who was subsequently permitted to stay on compassionate grounds did not qualify 314
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) - Paragraph 171(1)(b) - Subparagraph 171(1)(b)(iii) TCC, after finding against the taxpayer, improperly directed CRA to “seriously” consider interest relief and tax remission 262
Tax Topics - Statutory Interpretation - Ordinary Meaning supposed purpose cannot supplant clear language 67

Deluca v Canada, 2016 ONSC 3865

tax shelter participants are not an analogous class

The taxpayer’s claim against CRA for negligence in failing to revoke the registration of a charity on a timely-enough basis (so that he suffered losses as a result of making supposedly valuable donations to the charity) was struck by Dunphy J in its entirety. In addition he struck the s. 15 Charter claim of the taxpayer as frivolous, stating (at para 30):

It cannot be concluded from the facts pleaded that taxpayers making donations in kind through a barter network are members of an enumerated or analogous group under s. 15(1)… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) no tort damages against CRA for tort damages based on its denial of deductions 261
Tax Topics - General Concepts - Negligence and Fiduciary Duty CRA has no duty to protect taxpayers from participating in tax shelters 344

Ali v. Canada, 2008 DTC 6446, 2008 FCA 190

no discrimination denying tax credits for drugs that were obtainable without a prescription

A naturopath "prescribed" various herbs, vitamins and supplements for the treatment of the taxpayers' myalgic encephalomyelitis, chronic fatigue and immune dysfunction syndrome, multiple chemical sensitivity, and fibromyalgia. Ryers JA upheld the Tax Court's denial of the taxpayers' resulting claim for medical expense tax credits. Contrary to s. 118.2(2)(n), the items in question could be lawfully obtained without a prescription.

Ryers JA dismissed the taxpayer's argument that this constituted discrimination. Auton, [2004] 3 S.C.R. 657, establishes that there is nothing discriminatory in a legislative choice not to accord a particular benefit, unless that choice has a discriminatory purpose, policy or effect (paras. 13-14). There was no directly discriminatory purpose in Parliament's decision to restrict METCs to the specific items permitted under s. 1

Fannon v. Canada Revenue Agency, 2012 DTC 5130 [at 7247], 2012 FC 876, aff'd 2013 DTC 5088 [at 5975], 2013 FCA 99

non-custody parents not stereotyped

The taxpayer's son did not reside with him when he incurred expenses in caring for his son, and therefore the expenses were not "child care expenses" under s. 63(3). Near J. confirmed that s. 63(3) is not discriminatory under the Charter, as it does not perpetuate a disadvantage by perpetuation of prejudice or stereotypes. The mere deprivation of a financial benefit that would be available to parents with custody of their children is not enough to establish discrimination against parents without custody.

Pilette v. Canada, 2010 DTC 5075 [at 6808], 2009 FCA 367

The legislative choice reflected in s. 118(1)(b)(ii)(D), that no credit would be provided to young adults over the age of 18 who remained dependant upon their parents but were not suffering from a mental or physical infirmity, did not engage the right to equality set out in s. 15 of the Charter given the absence of direct or indirect discrimination in this legislative design.

Canada v. Wetzel, 2006 DTC 6189, 2006 FCA 103

The Tax Court erred in considering the taxpayer's claim that his section 15 Charter rights had been violated when officials at the Department of Indian Affairs caused an order-in-council to be issued that specified that members of an Indian band had to be of Canadian ancestry (the taxpayer being of American ancestry) in the absence of notice being given by the taxpayer under subsection 19.2(1) of the Tax Court of Canada Act that he was raising an issue as to the constitutional operability of a regulation. The impugned conduct by the officials represented a breach of proper conduct under administrative law rather than representing differential treatment based on the taxpayer's personal characteristic and, therefore, did not represent a Charter violation.

Canada (Attorney General) v. Campbell, 2006 DTC 6023, 2005 FCA 420

Paragraph (f) of the definition of in s. 122.6 of the Act, which provided that a female parent is presumed to be primarily responsible for the care and upbringing of a qualified dependant where the dependant resides with her, did not impair the sense of human dignity of the taxpayer as a member of a group (fathers) who were thereby accorded sex-base differential treatment and, therefore, did not violate s. 15 of the Charter.

Chua v. MNR, 2000 DTC 6527 (FCTD)

see also 2001 DTC 5104 (FCTD)

Article XXVI A of the Canada-U.S. Convention was contrary to section 15 of the Charter in light of the citizenship preference contained in paragraph 8 of Article XXVI A.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 26A 28

Weeks v. Canada, 2001 DTC 5035 (FCA)

The Minister allowed some medical expense tax credits in respect of care for a son of the taxpayer who suffered from congenital brain malformation [ultimately] but disallowed credits in respect of such items as books, compact discs, toys, computer equipment, and a van that was used by all family members. The taxpayer unsuccessfully advanced a Charter remedy that would have involved a judicial redrafting of s. 118.2(2) to allow a medical expense tax credit for all disability related expenses, including those incurred in the home rather than in an institution. The taxpayer failed to advance evidence to establish that the differential treatment accorded by s. 118.2(2) to institutional and home care gave families an incentive to choose institutional care for their disabled children over home care, thereby (as it was argued) perpetuating an historic negative stereotyping of disabled people.

The Queen v. Mercier, 97 DTC 5081 (FCTD)

The 18-year age limit in s. 118(1)(b)(ii)(D) was not contrary to s. 15(1) of the Charter (and would have been justified under s. 1 of the Charter if it were).

Vosicky v. The Queen, 96 DTC 6580 (FCA)

In rejecting a submission that the forward averaging provisions of the Income Tax Act discriminated against poor taxpayers by tying the forward averaging credit to the top marginal rate, Hugessen J.A. stated that "the establishment of different tax rates for different income tax brackets does not constitute discrimination on a ground enumerated in s. 15 or on any analogous ground".

Thibaudeau v. The Queen, 95 DTC 5273 (SCC)

S.56(1)(b), which required the inclusion of child maintenance payments in the hands of the recipient (in this case, the former wife of the payor) did not, when considered in conjunction with the corresponding deduction in s. 60(b) and in light of the requirement under family law to take the income tax position of the recipient into account, did not impose a burden on the recipient because there would be a corresponding gross-up for the amount of such tax in most instances and, because the income-splitting effect of the provisions made more resources available for the payment of maintenance.

Lister v. The Queen, 94 DTC 6531 (FCA)

In response to a submission that s. 122.5 discriminated against children under the age of 19 because it is only their parents who are entitled to claim the tax credit on their behalf, Létourneau J.A. found that the applicants had failed to establish any prejudice or stereotyping in these circumstances, nor any fundamental unfairness. Accordingly, the provision was not contrary to s. 15(1) of the Charter.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 122.5 65

Kasvand v. The Queen, 94 DTC 6271 (FCA)

The exclusion from the definition of "earned income" in s. 146(1) of such sources of income as pensions, family allowances, interests and other investment income was not contrary to s. 15(1) of the Charter. The definition effectively drew a distinction among taxpayers on the basis of sources of income rather than any basis of discrimination proscribed by s. 15(1).

Symes v. Canada, 94 DTC 6001, [1993] 4 S.C.R. 695

The limitation on the deduction of child care expenses in s. 63 of the Act did not violate s. 15(1) of the Charter in the absence of evidence that women disproportionately pay child care expenses. However, Iacobucci J. noted (p. 6026) that:

"if, for example, it could be established that women are more likely than men to head single-parent households, one can imagine that an adverse effects analysis involving single mothers might well take a different course, since child care expenses would thus disproportionately fall upon women."

Schachtschneider v. The Queen, 93 DTC 5298 (FCA)

The fact that s. 118(1) at the time provided a greater benefit to an unmarried couple with a child than to a married couple with a child could not be characterized as discrimination based on religion contrary to s. 15 of the Charter; nor did it interfere with either's religious belief or practice contrary to s. 2(a) of the Charter.

OPSEU v. National Citizens' Coalition, 90 DTC 6326 (Ont CA)

The more stringent requirements under the Income Tax Act for the deduction of expenses by an employee rather than a self-employed businessman (and, in particular, the alleged deductibility by businesses of fees paid to the National Citizens' Coalition) did not constitute discrimination against a group (i.e., employees) for purposes of subsection 15(1). "This huge group of taxpayers is not a 'discrete and insular minority'".

The Queen v. Kurisko, 88 DTC 6434, [1988] 2 CTC 254 (FCTD), aff'd 90 DTC 6376 (FCA)

S.8(1)(m) of the Act (which establishes a $3500 limit for pension plan contributions) is a provision of general application and is not specifically directed at federally-appointed judges (who are required to contribute more than the limit to a statutory plan). S.8(1)(m) accordingly does not offend s. 15 of the Charter.

Wright v. Attorney-General of Canada, 88 DTC 6041, [1988] 1 CTC 107 (Ont. D. Ct.)

The Crown is not an "individual" for purposes of s. 15(1) and an attack under s. 15(1) on Crown prerogative powers accordingly failed.

R. v. Century 21 Ramos Realty Inc., 87 DTC 5158, [1987] 1 CTC 340 (Ont.C.A.)

The Attorney General's right of election in s. 239(2) does not contravene s. 15 of the Charter. S.239(2) "provides the Attorney General with sufficient flexibility to take the specific circumstances of each case into account and ensure that, in each case, the interests of justice are served."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) benefit based on actual rather than subjective value 91
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 95

Gerol v. A.G. Canada, 85 DTC 5561, [1986] 1 CTC 75 (S.C.O.)

The requirement in s. 146(2)(b)(iii) that an RRSP not provide for maturity after the end of the year in which the annuitant attains the age of 71 does not violate the Charter.

See Also

Leeper v. The Queen, 2015 DTC 1115 [at 733], 2015 TCC 82 (Informal Procedure)

non-creditability of natural cancer remedies not discriminatory

It was not discriminatory under the Charter to deny medical expense tax credits for natural cancer remedies.

The decision was not distinguishable from Ali. Although that decision dealth with fibromyalgia and chronic fatigue syndrome instead of a life-threatening ailment, this distinction was irrelevant under a s. 15 analysis.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118 - 118(2) - 118(2)(n) supplements, vitamins and herbs not eligible 46
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 unavailability of tax credit for natural cancer remedies did not infringe the taxpayer's s. 7 rights 48

D'Ambrosio v. The Queen, 2014 DTC 1090 [at 3154], 2014 TCC 70 (Informal Procedure)

obligation to pay child support is not an analogous ground

The taxpayer argued that s. 118(5), which denied his access to a s. 118(1) child tax credits because he paid court-ordered support amounts, was a violation of his s. 15(1) Charter rights. VA Miller J pointed out that the obligation to pay child support is not an analogous ground of discrimination. Moreover, the obligation to pay child support came about because of his personal income, which is also not an analogous ground (para. 15).

Hall v. The Queen, 2013 DTC 1241 [at 1313], 2013 TCC 314 (Informal Procedure)

no charitable registration, no discrimination

Pizzitelli J found that there was no discrimination in denying the taxpayer charitable credits for donations made to the International Association of Scientologists, which was not a registered charity, because nobody is entitled to charitable credits for donations to entities that are not registered charities.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts no charitable registration, no discrimination 44

Johnston v. The Queen, 2012 DTC 1175 [at 3437], 2012 TCC 177 (Informal Procedure)

The taxpayer installed a hot tub to be used as a hydrotherapy pool for her daughter, who had cerebreal palsy-related spastic quadriplegia and other conditions. Boyle J. found that the installation was excluded under s. 118.2(2)(l.2)(ii) from qualifying for medical expense tax credits. That subparagraph allows credits for renovations or alterations to a dwelling only if they "would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment."

Boyle J. found that this conclusion was not precluded by s. 15(1) of the Charter. He stated (at para. 16):

I am unable to see any discrimination or unequal treatment of Erin as compared to other Canadians. No other Canadian, whether a child or adult, whether a dependent or not, and whether disabled or not, is entitled to claim a hot tub in such circumstances as a METC.

Astley v. The Queen, 2012 DTC 1162 [at 3394], 2012 TCC 155 (Informal Procedure)

The taxpayer did not begin to live with her spouse (who was still in the process of immigrating to Canada) until after the taxation year in question. She appealed the requirement that she include her spouse's income in determining whether she was eligible for Canada Child Tax Benefits (CCTB). She argued that this inclusion discriminated against married couples, as common-law couples were only obligated to combine their incomes for CCTB purposes if they were cohabiting. Webb J. dismissed the appeal, as the distinction did not effect any substantive inequality - there is no indication that the income-combining requirement "'perpetuates disadvantage or stereotyping' of married couples" (para. 20).

Stogrin v. The Queen, 2012 DTC 1021 [at 2599], 2011 TCC 532 (Informal Procedure)

The taxpayer argued that the 50% limitation on meal expense deductions in s. 67.1 was discriminatory because it did not produce a roughly equivalent economic benefit to that enjoyed by government employees with respect to similar expenses. Hogan J. dismissed the argument. Section 67.1 has repeatedly held up under Charter scrutiny.

Fannon v. The Queen, 2012 DTC 1007 [at 2534], 2011 TCC 503 (Informal Procedure)

The taxpayer's court-ordered daycare expenses were not deductible under s. 63(3) because he did not reside with the child. Webb J. dismissed the taxpayer's argument that s. 63(3) was discrimination prohibited under s. 15(1) of the Charter, because "whether a child is residing with one person or another is not a characteristic that is immutable or changeable only at an unacceptable cost to personal identity" (para. 15).

Hotte v. The Queen, 2011 DTC 1011 [at 64], 2010 TCC 611 (Informal Procedure)

Boyle J. found that the distinction in s. 118 that allows taxpayers of 65 years and older to split all pension income with a spouse, but restricts taxpayers younger than 65 years to splitting only qualified pension income, did not contravene s. 15(1) of the Charter. He found at para. 16 that the 65-year cutoff was meant to essentially reserve for retirees a particular retirement-related tax advantage. As per Gosselin, 2002 SCC 84 at para. 57, if the age chosen was "reasonably related to the legislative goal" then that would suggest that the age-based distinction did not amount to discrimination under the Charter.

Boyle J. at para. 7 also dismissed arguments made under the Canadian Human Rights Act on the grounds that the Tax Court had no jurisdiction to hear complaints under that statute.

Tall v. The Queen, 2009 DTC 187, 2008 TCC 677 (Informal Procedure)

V.A. Miller, J. followed the decision in Ali v. The Queen, 2008 DTC 6446, 2008 FCA 190 in finding that the "recorded by a pharmacist" requirement in s. 118.2(2)(n) did not violate the equality rights guaranteed by s. 15 of the Charter as this paragraph did not make a distinction based on personal characteristics.

McKenna v. The Queen, 2005 DTC 1410, 2005 TCC 599 (Informal Procedure)

The taxpayer unsuccessfully made a submission that it constituted discrimination contrary to s. 15(1) of the Charter for disability pension benefits that she received under the Canada Pension Plan Act to be included in her income without a credit being accorded to her under s. 118.3 of the Act.

Barrons v. The Queen, 95 DTC 483 (TCC)

In response to a contention that as a member of the "working class", the taxpayer's charter rights were violated because she did not, for economic reasons, have access to income tax specialists who could explain her rights and obligations under the Income Tax Act, Bowman TCJ. found that the large and amorphous group of persons which the taxpayer described as the working class were not a discrete and insular minority of the type that the Charter was designed to protect from the obligation to pay the taxes imposed by Parliament.

Weronski v. MNR, 91 DTC 1105 (TCC)

The fact that the requirements in s. 60(c.1) of the Act for the deduction of payments made to a former common-law spouse were more stringent than those applicable in s. 60(b) for payments to a spouse did not constitute discrimination for purposes of s. 15(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(c.1) 44

Section 16

Cases

Yates v. The Queen, 2001 DTC 761 (TCC) (Informal Procedure)

In finding that the failure of the Act to allow a deduction or tax credit for contributions to a foreign insurance plan did not represent an infringement of section 15 of the Charter, Campbell T.C.J. stated (at p. 767):

"All employed Canadian citizens are required to make CPP contributions and are entitled to a corresponding deduction ... . Citizens of this country whether of U.K. national origin or Canadian national origin are not entitled to a like deduction for contributions made to a foreign insurance plan. There is no differential treatment as nationality does not come into play."

Section 19

Cases

Mazraani v. Industrial Alliance Insurance and Financial Services Inc., 2018 SCC 50

Tax Court’s pressuring witnesses to speak in English, not French, required a new hearing

The appellant (M), who had been a representative for an insurance company (“Industrial”) and had been treated by it as an independent contractor, appealed to the Tax Court on the basis that he had instead been employed in insurable employment for Employment Insurance purposes. At the hearing, Industrial was an intervenor and called witnesses whose testimony in French would not have been understood by M. Rather than providing M with an interpreter, the Tax Court Judge exerted pressure on Industrial's witnesses to testify in English, which counsel for Industrial communicated was problematic. The Judge also required Industrial’s counsel to make his legal arguments in English, even though this was difficult for him.

Before affirming the decision of the Federal Court of Appeal ordering a new hearing before a different judge in response to these violations of the witness’s and counsel’s language rights under s. 133 of the Constitution Act, 1867, s. 19 of the Charter and ss. 14 and 15 of the Official Languages Act (with the OLA being described at para. 25 as providing language rights that were “quasi-constitutional in nature,” Gascon and Côté JJ stated (at paras 40, 46, 48, 64 and 78):

… [T]he right at issue in this case is that of speaking in the official language of one's choice. … A person may choose to stick to a single official language or may even change his or her mind while testifying.

[B]ecause language rights are not procedural rights, the fact that a violation has had no impact on the fairness of the hearing is in principle not relevant to the remedy … . Indeed, even if there was no error in the decision on the merits, the language rights in question would be compromised if no remedy was granted

… [A] new hearing will generally be an appropriate remedy for most language rights violations … because such a violation deprives one party of the possibility of having access to Canadian justice in the official language of his or her choice. … A judge's failure to take the rights of the persons before him or her into account constitutes both an error of law and a denial of natural justice independently of the quality of his or her judgment and the absence of substantive errors.

The judge’s insistence that [Industrial’s counsel] speak English during most of his argument constitutes a flagrant violation of the lawyer’s language rights.

… [T]he order for a new hearing was fully justified. … The violations were numerous and, in some cases, serious and repeated, and they brought the administration of justice into disrepute.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 133 language rights are substantive 251

Subsection 20(1)

Cases

Kasvand v. The Queen, 94 DTC 6271 (FCA)

In finding that the definition of "earned income" in s. 146(1) of the Act did not violate s. 20(1) of the Charter, Mahoney J.A. stated:

"While we would not wish to suggest that it is beyond the wit of the drafters of the Income Tax Act to achieve a measure of incomprehensibility that might run afoul of subsection 20(1), we do not think that paragraph 146(1)(c) has quite arrived."

Subsection 24(1)

Cases

Samaroo v. Canada Revenue Agency, 2018 BCSC 324

malicious prosecution in breach of s. Charter rights gave rise to Charter s. 24 damages in the alternative

A couple who operated a restaurant in B.C. have been awarded $1.7 million in damages (including $750,000 in punitive damages) against CRA for malicious prosecution. After so finding, Punnett also found (at paras 289, 336 and 337):

As I have found the CRA initiated the prosecution of the plaintiffs when it was wrongful to do so, their s. 7 Charter rights have been breached. Mr. Kendal suppressed exculpatory evidence from the defence, and created inculpatory evidence in an effort to secure a conviction. The CRA used the powers of the State in the form of a criminal prosecution to wrongfully and maliciously prosecute the Samaroos.

The Court in Vancouver (City) v. Ward, 2010 SCC 27, found that s. 24(1) is broad enough to encompass claims for damages as a result of Charter breaches.

…As I have awarded the plaintiffs punitive damages, I decline to order damages under s. 24(1) of the Charter.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Malicious Prosecution CRA dominated prosecution and knowingly misstated evidence 577
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 7 malicious prosecution breached a couple's s. 7 rights 210

R. v. Lagiorgia, 87 DTC 5245, [1987] 1 CTC 424 (FCA)

Where the Crown has made an illegal seizure, the "heavy burden" upon it to justify retention of the seized documents, and copies and extracts thereof, cannot be satisfied by a simple assertion that the things seized are needed for a prosecution.

Lagiorgia v. The Queen, 85 DTC 5554, [1985] 2 CTC 25 (FCTD), aff'd in part supra.

Although a Court has the discretion under s. 24(1) to award damages to a taxpayer respecting an unconstitutional seizure by the Crown, such an award was not appropriate here where the Crown had made an unconstitutional seizure in good faith. The appropriate sanction was to order a return of the taxpayer's documents (but not documents seized at the premises of his accountant) to him.

Lewis v. M.N.R., 84 DTC 6550, [1984] CTC 642 (FCTD)

Where a seizure of records was unlawful by reason of S.8 of the Charter, the records improperly seized should be returned even if they may be required as evidence in subsequent proceedings.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 return of seized items 20

Thyssen Canada Ltd. v. The Queen, 84 DTC 6049, [1984] CTC 64 (FCTD)

S.24 cannot be invoked with retrospective effect, and accordingly cannot apply to an alleged seizure that took place before 1982.

Butler Manufacturing Co. (Canada) Ltd. v. MNR, 83 DTC 536 (S.C.O.)

Although in an application under the Judicial Review Procedure Act (Ontario) for an order in the nature of certiorari the applicant is generally precluded from adducing evidence to supplement the record, it would appear that such a restriction would not apply to a s. 24 remedy for search or seizure contrary to s. 8 of the Charter.

Subsection 24(2)

Cases

Donovan v. The Queen, 2000 DTC 6339 (FCA)

Following a seizure conducted in good faith of documents of the taxpayer pursuant to s. 231.3 of the Act, that provision was found in the Baron case to be unconstitutional. The Department officials, after having unsuccessfully tried to obtain a further warrant, had agreed to return the documents in question to the taxpayer's law firm. The officials then "concocted a scheme whereby they would not really return the documents but would hand them over temporarily and then reseize them immediately pursuant to a new legal warrant" (which they obtained without informing the Court of the relevant circumstances).

At issue were reassessments of the taxpayer for unreported income. Although the conduct of the officials was "not so 'flagrant and egregious' as to support the extreme remedy of vacating these reassessments in light of the minimal importance of the additional evidence obtained by these violations" (p. 6344), the Department was directed to exclude from the reassessments the amount of additional unreported income discovered as a result of the second seizure. Linden J.A. had previously noted (at p. 6342) that "the use of tainted evidence in a criminal proceeding is a much more serious matter than in a civil proceeding".

R. v. Hazlewood, 93 DTC 5406 (BCSC)

The admission of evidence seized pursuant to seizure under s. 231.3 would not bring the administration of justice into disrepute because, when the warrants were originally obtained, there was no suggestion that there might be a constitutional problem with s. 231.3, full and complete disclosure was made to the issuing judge and the Revenue Canada investigators acted appropriately.

R. v. Agopsowicz, 93 DTC 5416 (Sask. P. Ct.)

Documentary evidence that the Crown had seized pursuant to a search warrant granted pursuant to s. 231.3 of the Act prior to the decision of the Supreme Court of Canada in the Baron case and that the Department had unsuccessfully applied to re-seize pursuant to 487 of the Criminal Code was found to be inadmissible.

The Queen v. F.K. Clayton Group Ltd., 89 DTC 5417 (S.C.O.)

The Minister made what was subsequently held to be an unconstitutional seizure pursuant to the former s. 231(1)(d) and was ordered to return the seized documents. The admission of some of this evidence to support a fresh application for a warrant pursuant to s. 231.3 would not bring the administration of justice into disrepute.

R. v. James; Dzagic v. R., 86 DTC 6432, [1986] 2 CTC 288 (Ont.C.A.), briefly aff'd 88 DTC 6273, [1988] 1 S.C.R. 669

S.24(2) cannot apply to exclude illegally obtained evidence where the ilegality did not entail infringement of the Charter.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 8 Charter effective date 22

Thyssen Canada Ltd. v. The Queen, 84 DTC 6049, [1984] CTC 64 (FCTD)

The secretive photocopying by a tax auditor of a document of the taxpayer and the production of that document at trial would not constitute conduct that 'shocks the community', and thus would not bring the administration of justice into disrepute. (Obiter)

Section 25

Cases

Rice v. ARQ, 2016 QCCA 666

no unfettered right of Indians to trade

The appellants, all status Indians, were gasoline retailers on the Kahnawake Reserve who did not charge or collect taxes under the Excise Tax Act, Quebec Sales Tax Act or Quebec Fuel Tax Act on their gasoline sales notwithstanding that most of their customers were not Indian.

After finding that s. 35 of the Constitution Act, 1982 did not accord an unfettered right to trade, Hesler CJQ found further found that the Royal Proclamation of 1763 did not provide an Aboriginal right to free and unfettered trade (protected from derogation by s. 25 of the Constitution Act, 1982), stating (at para 63):

Its objective was to protect them from the abuses of certain unscrupulous merchants, by obliging the latter to obtain a licence. Nothing in the text of the Royal Proclamation or its historical context gives rise to the conclusion that British Crown promised Aboriginals an unrestricted right to trade that was exempt from regulation of any kind.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 35 - Subsection 35(1) s. 35 did not accord an unfettered right to trade 131
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 status Indians were required to collect sales tax on sales to non-Indians 283
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(1) status Indians were required to collect sales tax on sales to non-Indians 67
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 91 - Subsection 91(24) statutory verification obligations did not represent an ultra vires administrative burden 157

Section 35

Subsection 35(1)

Cases

Rice v. ARQ, 2016 QCCA 666

s. 35 did not accord an unfettered right to trade

The appellants, all status Indians, were gasoline retailers on the Kahnawake Reserve who did not charge or collect taxes under the Excise Tax Act, Quebec Sales Tax Act or Quebec Fuel Tax Act on their gasoline sales notwithstanding that most of their customers were not Indian.

Hesler CJQ found that their obligations to collect and remit taxes on their fuel sales did not violate the ancestral right to trade freely and openly as protected by s. 35(1) of the Constitution Act, 1982, stating (at para 42):

There must… be a reasonable degree of continuity between the ancestral practice being invoked and the modern right being asserted… [T]he practice of trading objects to which the spiritual power symbolic of Orenda attached cannot be the basis of the modern right … to trade freely without hindrance.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 25 no unfettered right of Indians to trade 151
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 status Indians were required to collect sales tax on sales to non-Indians 283
Tax Topics - Excise Tax Act - Section 221 - Subsection 221(1) status Indians were required to collect sales tax on sales to non-Indians 67
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 91 - Subsection 91(24) statutory verification obligations did not represent an ultra vires administrative burden 157