Canada: Canadian Federal Court pulls the reins in (slightly) on foreign information requests

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Canadian Federal Court pulls the reins in (slightly) on foreign information requests

Gagnon-Jean-Marc
Carbone-Alexandra

Jean Marc Gagnon

Alexandra Carbone

In Amdocs Canadian Managed Services Inc. (ACMS), the Federal Court denied the Canada Revenue Agency's (CRA) request under section 231.7 of the Income Tax Act, Canada (Act) to compel ACMS to provide the CRA with documents and information requested in the course of a transfer pricing audit.

The CRA alleged that queries had not been satisfactorily answered, leaving the CRA in a position where it would have to audit and assess ACMS based on incomplete information.

ACMS contended that although the documents requested were not within its control, it had taken reasonable steps to obtain the information and provide it to the CRA. ACMS submitted that it could not be compelled to provide documents that are not in its possession or control or to create documents that did not exist. If such documents existed, they were located outside Canada, outside ACMS's control and did not fall within the provisions supporting the CRA's application.

The judge noted that it is within the CRA's prerogative to request information over the course of the audit, and found that ACMS had failed to comply in this regard. He also found that ACMS had made reasonable efforts to acquire the documentation at issue, thereby falling within an exception to complying with information requests. Noting that there was no purpose in ordering ACMS to do something it could not do, the judge declined to grant the CRA the relief sought.

Although the taxpayer was successful in this case, the judge acknowledged the CRA's broad discretion to request information from taxpayers during an audit and that other provisions of the Act would have better served CRA's interest. The CRA may have to be more accepting of taxpayers that have made reasonable efforts to comply with its requests but are unable to do so, or be more specific in its information requests.

Jean Marc Gagnon (jean.gagnon@blakes.com) and Alexandra Carbone (alexandra.carbone@blakes.com)

Blake, Cassels & Graydon

Tel: +1 514 982 5025 and +1 514 982 5034

Website: www.blakes.com

more across site & bottom lb ros

More from across our site

US partner Matthew Chen was named as potentially the first overseas PwC staffer implicated in the tax leaks scandal, in a dramatic week for the ‘big four’ firm
PwC alleged it has suffered identifiable loss and damage arising out of a former partner's unauthorised use of confidential information; in other news, Forvis Mazars unveiled its next UK CEO
Luxembourg saw the highest increase in tax-to-GDP ratio out of OECD countries in 2023, according to the organisation’s new Revenue Statistics report
Ryan’s VAT practice leader for Europe tells ITR about promoting kindness, playing the violincello and why tax being boring is a ‘ridiculous’ idea
Technology is on the way to relieve tax advisers tired by onerous pillar two preparations, says Russell Gammon of Tax Systems
A high number of granted APAs demonstrates the Italian tax authorities' commitment to resolving TP issues proactively, experts say
Malta risks ceding tax revenues to jurisdictions that adopt the global minimum tax sooner, the IMF said
The UK and what has been dubbed its ‘second empire’ have been found to be responsible for 26% of all countries’ tax losses by the Tax Justice Network
Ireland offers more than just its competitive corporate tax environment but a reduction in the US rate under a Trump administration could affect the country, experts tell ITR
The ‘big four’ firm was originally prohibited from tendering for government work until December 1 due to its tax leaks scandal, but ongoing investigations into the matter have seen the date extended
Gift this article