Federal Court

Charter of Rights

Auditors can continue to assess civil liability while criminal investigation unfolds

Applicants were allegedly involved in tax plan operated by Independent Business Consultants Association, in which business losses could be sold to other taxpayers. Canada Revenue Agency (“CRA”) brought criminal investigation of promoters of plan. CRA also conducted civil audits of applicants and asked them to provide relevant information and documents. However, none of them responded. As result, they received requirements for information (“RFIs”). None of them responded to those, either. Rather, applicants commenced proceedings seeking to overturn RFIs. Applicants claimed that RFIs were improperly issued for purpose of gathering information for criminal investigation against them and that RFIs violated their right to remain silent protected under s. 7 of Charter. Application dismissed. Only one applicant was under criminal investigation at time RFIs were issued. There was no objective evidence indicating that other applicants were under criminal investigation. Therefore, only individual applicant’s s. 7 liberty interests were engaged in this case. Mere fact that individual applicant was under criminal investigation was not enough to defeat RFIs. Auditors can continue to assess civil liability while criminal investigation unfolds. If auditors were forced to cease work after investigation commenced, taxpayers could avoid civil liability when their conduct raised concerns of criminal conduct. Predominant purpose of RFIs issued against applicants, including individual applicant, was civil. Therefore, their s. 7 Charter rights, specifically, right to remain silent and to avoid self-incrimination were not engaged.

Breau v. Minister of National Revenue (Oct. 17, 2012, F.C., O’Reilly J., File No. T-1623-09; T-1625-09) 104 W.C.B. (2d) 1019.

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