By Ryan M. Prendergast

The Federal Court of Appeal has affirmed the principle that the Minister of National Revenue (the “Minister”) can compel the production of information that should have been recorded in relation to income tax filings, even if this information was never recorded in the first place. In Miller v Canada (National Revenue), the Federal Court of Appeal upheld the Federal Court’s ruling on the matter, which was reported in the October 2021 Charity & NFP Law Update.

Mr. Miller was a consultant who had an unwritten arrangement with a client based in Europe. There were no recorded invoices documenting their transactions. The Canada Revenue Agency (“CRA”) audited Mr. Miller’s personal finances, and sent various requests for documents and information, as a result of which the agency regarded him as “unresponsive”.

Consequently, the Minister brought an application in Federal Court against Mr. Miller, which claimed that he was failing to provide necessary information to the CRA, as stipulated under subsection 231.1(1) of the Income Tax Act (ITA). In his defence, Mr. Miller stated that he had complied to the best of his ability, and that the documents sought were not available.

The Minister claimed her powers to gather information are broad and entitle her to request written information about official records and documents. Mr. Miller relied on Her Majesty the Queen v Cameco Corporation (“Cameco”), which held that employees of a corporation do not need to orally answer questions posed by the CRA. This was not accepted by the Federal Court drawing a distinction between being compelled to answer questions by the CRA and being required to provide necessary information for CRA verification purposes, as was the case at hand. Therefore, Mr. Miller was found to have violated the ITA.

On appeal, the Federal Court of Appeal found that the Federal Court did not err in ruling that the CRA was justified in demanding the relevant documents under subsection 231.1(1) of the ITA. Mr. Miller was incorrect that the ruling in Cameco applied in this case. While the CRA cannot compel oral interviews of employees in regard to corporate audits, the situation before the court touched on neither of those issues. Mr. Miller was not being forced to give oral evidence regarding a corporate matter; rather, he was being compelled to produce information regarding his own personal finances.

The plain wording of the ITA allows the CRA to perform an “audit” of “documents”, and the court saw no reason why this plain wording should not stand. As the information should have been contained in the documents that Mr. Miller was legally obliged to provide, the CRA had the right to demand the omitted facts. Section 231.1 exists to ensure compliance with the ITA, so by not providing the Minister with the complete information required, the Minister could justifiably use this section to compel a production of complete information.

This case stands as a reminder that individuals cannot simply neglect to record information that is relevant to their tax filings. The CRA will not accept the fact that said information has not been recorded. The specific ruling in Cameco does not apply to information that properly belongs on an information return. The Minister has broad powers to require an individual to provide supplementary evidence to support the specifics provided in their information return, and that is not the same as being compelled to provide oral evidence as an employee of a company, the limits of which have been defined in Cameco. 

​Read the November 2022 Charity & NFP Law Update