An interesting case was decided recently in the Ontario Superior Court. It dealt with a motion brought by the Attorney General of Canada (the A.G.) to set aside an order that would have required CRA to be summoned as a witness in the midst of a family law dispute.
The motion (Derakhshan v Narula et al, 2017 ONSC 1415) was brought by the A.G. to oppose a request by the divorcing husband to require Lynn Atkinson, an area director at CRA, to appear as a witness to testify about the accuracy and completeness of his ex-wife’s returns.
Based on the husband’s emails to his ex and to her counsel, it would appear that the husband sought to have a CRA auditor at the family law hearing in order to confirm that the copies of the tax filings given to him by his wife matched what she submitted to CRA, and to give expert evidence on whether her tax filings were completed properly.
In an email, the husband wrote: “I need [an] auditor from CRA to be present at the courthouse while the questioning [of my wife] and accountant is in progress just to make sure the information they are providing matches what they have already submitted to CRA. At the same time the auditor could be present to make sure the taxes are done correctly as we have found many discrepancies in the tax forms provide[d] to me.”
Under the Income Tax Act, the disclosure of taxpayer information is restricted. The act says:
Except as authorized by this section, no official or other representative of a government entity shall
(A) knowingly provide, or knowingly allow to be provided, to any person any taxpayer information;
(B) knowingly allow any person to have access to any taxpayer information; or
(C) knowingly use any taxpayer information otherwise than in the course of the administration or enforcement of this act, the Canada Pension Plan, the Unemployment Insurance Act or the Employment Insurance Act, or for the purpose for which it was provided under this section.
Notwithstanding any other act of Parliament or other law, no official or other representative of a government entity shall be required, in connection with any legal proceedings, to give or produce evidence relating to any taxpayer information.
The definition of “taxpayer information” applies to the information the husband was seeking.
Kelly Charlebois, a partner and litigator at Miller Thomson LLP in Toronto, says the law, as written and enforced, makes sense as “CRA doesn’t want to be subpoenaed in every civil dispute just to confirm that this is the taxpayer’s return.” She says a taxpayer can always request “an income and deductions printout” from CRA with the current date to confirm that a tax return hasn’t been adjusted after it has been filed.
Previous case law has held that the rules in the tax act “are to be strictly enforced and that disclosure of taxpayer information may only be disclosed in accordance with that section.” As a result, the judge concluded that “the court does not have jurisdiction to order disclosure of taxpayer information in the civil context unless the disclosure is authorized by [the above] section.”
The judge concluded it was “improper” for the husband to have attempted to call Atkinson to give expert evidence at the trial as a CRA auditor, and to be present in court to give her opinion that “the taxes are done correctly.” As a result, the judge set aside the summons for CRA to appear and awarded the A.G. and the wife their costs of this motion trial.
Lorne Wolfson, a senior partner and family law specialist at Torkin Manes LLP in Toronto, suggests that the problem concerning the authenticity of tax documents “had an easy solution […] if only the taxpayer had gotten some advice.” Explains Wolfson: “You can get a court order from the family law court directing the wife to authorize CRA to give the documents to the husband.”