The Federal Court had granted a CRA application pursuant to s. 231.7 seeking an order requiring BMO Nesbit Burns (“NBI”) to provide an unredacted version of a spreadsheet in connection with CRA’s audit of suspected dividend rental arrangement transactions of NBI. Locke JA found no reversible error in the findings below that NBI had not established that the redactions were necessary to protect legal advice from disclosure.
In rejecting NBI’s further argument (at para. 7) that “the Minister’s application should not have been granted in the absence of an ongoing tax audit,” Locke JA stated (at para. 7) that “there is no doubt that the audit was ongoing when the Minister first requested the unredacted Spreadsheet,” and further stated:
[I]t cannot have been Parliament’s intent to permit the target of an audit to avoid an order pursuant to subsection 231.7(1) of the Act by delaying compliance with a document request until after issuance of a notice of reassessment. …
To conclude otherwise would reward non-compliance with legitimate document requests from the Minister.
In briefly rejecting NBI’s submission (at para. 8) “that ordering production of the unredacted Spreadsheet amounts to requiring NBI to conduct a self-audit or to reveal its ‘soft spots’,” he stated that “we find that the decision of this Court in BP Canada … is distinguishable.”