Neither “inspect” nor “examine” suggested power to compel person to answer questions and oral examination was not ordinary meaning of word “audit”

Federal appeal | Tax | Income tax | Administration and enforcement

Taxpayer C Corp. refused demand by Minister of National Revenue for in-person interviews with taxpayer's employees pursuant to s. 231.1(1)(a) of Income Tax Act as part of audit as to whether taxpayer complied with transfer pricing rules. Federal Court judge dismissed Minister’s summary application for compliance order directing taxpayer to produce employees for interviews. Minister appealed. Appeal dismissed. Section 231.1(1)(a) of Act cannot be interpreted so as to permit Minister to compel oral interviews of taxpayer or its employees concerning its tax liability. Focus of powers to “inspect, audit or examine” in s. 231.1(1)(a) of Act was on Minister’s ability to access information in taxpayer’s books and records. Neither “inspect” nor “examine” suggested power to compel person to answer questions and oral examination was not ordinary meaning of word “audit”. Context of provision showed that s. 231.1 of Act was intended to allow Minister to independently verify through audit, which was different than compelling answers to questions. Purpose of s. 231.1 of Act was to facilitate Minister’s access to all books, records and information of taxpayer. Concept of “clean hands” had no role in determining whether compliance order should issue. Issue of admissibility of evidence and prejudice arising from answers given during audit was to be dealt with by Tax Court, not at audit stage. Principle of proportionality and vagueness were not relevant considerations in request for compliance order under s. 231.7 of Act.

Canada (National Revenue) v. Cameco Corporation (2019), 2019 CarswellNat 957, 2019 FCA 67, Donald J. Rennie J.A., Judith Woods J.A., and J.B. Laskin J.A. (F.C.A.); affirmed (2017), 2017 CarswellNat 3791, 2017 CarswellNat 6716, 2017 FC 763, 2017 CF 763, Glennys L. McVeigh J. (F.C.).

Free newsletter

Our daily newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please complete the form below and click on subscribe for daily newsletters from Law Times.

Recent articles & video

Open schedule at Competition Tribunal presents opportunity for commissioner, lawyer says

Students raise alarm on future of university legal clinics

CICB to cease accepting applications on Oct. 1

Stikeman Elliott, Rubin Thomlinson, McCarthy Tétrault win HR awards

Insurance lawyers reveal their referral philosophies

Court of Appeal rules auto insurer not liable for parental negligence claim stemming from accident

Most Read Articles

New equality measure approved by Law Society of Ontario as the statement of principles gets repealed

Judges call out lack of support for legal aid, pro bono amid MAG presence

Chasm in opinions remains after statement of principles repeal

Law students, paralegals can continue working on the same summary conviction matters