Minister had reason to believe that taxpayer was “protector” of named entities

Income Tax – Administration and enforcement

Canada Revenue Agency (CRA) was auditing taxpayer under Related Party Initiative (RPI), which examined tax compliance of high net individuals and their related entities. Starting from 2015 and onward, taxpayer was informed about audit and CRA had also sent questionnaire to taxpayer, which was partially answered. Minister issued requirements that taxpayer provide certain information and documents within Canada and outside of Canada. Taxpayer advised CRA that offshore trusts were established on his behalf as part of two asset protection plans. CRA repeatedly made requests for financial statements of related foreign entities and at time of application, there were still outstanding items from CRA query. Taxpayer brought application for judicial review. Application dismissed. Taxpayer's evidence of inability to comply for range of reasons was properly subject matter of potential enforcement stage of existing process. Fact that requirements were issued to taxpayer personally was not unreasonable, because Minister had reason to believe that taxpayer was “protector” of named entities. Current investigative stage was only concerned with relevance and content of requests for information, and if taxpayer failed to produce as requested, Minister could seek compliance order.

Chad v. Canada (National Revenue) (2019), 2019 CarswellNat 8330, 2019 FC 1456, Douglas R. Campbell J. (F.C.).

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