The Minister denied the taxpayer's deduction of amounts alleged to have been paid in cash to an individual ("Batalha") for his work in the taxpayer's computer technology consulting business. Batalha claimed that he was paid substantially less than the alleged amounts. At the time of the application, a reassessment of Batalha to include the larger receipts alleged by the taxpayer would have been outside the normal reassessment period. The Minister applied under s. 174 to have Batalha joined to the proceedings.
Boyle J dismissed the Minister's application. Section 174 permits the Court to order a reference in respect of taxpayers who have been assessed in respect of a common question arising out of the same circumstances or in respect of taxpayers for whom such an assessment is proposed. The Minister was only contingently or conditionally considering reassessing Batalha. Boyle J stated (at para. 35):
I am not satisfied that such a contingent intention to consider reassessing a taxpayer constitutes a proposed assessment of that taxpayer for the purposes of section 174. ... It does not seem appropriate that each time that occurs the CRA should have the right to ask the Court to consider making the witness a party to the tax proceeding. ... While it may be appropriate in a close or grey‑area case to permit the CRA to ask the Court to consider ordering a reference, this hardly seems appropriate where the CRA, after investigation, has concluded clearly in one direction and not the other.