Canada (National Revenue) v. BP Canada Energy Company, 2015 DTC 5077 [at at 5958], 2015 FC 714, rev'd 2017 FCA 61 -- summary under Subsection 231.1(1)

By services, 28 November, 2015

Campbell J allowed the Minister's s. 231.7 application to enforce her demand for unredacted copies of its tax accrual working papers (containing descriptions of issues for which it had exposure). The papers were compellable because they were "an important tax record in BP Canada's possession" (para. 25). Whatever policy ramifications flow from compelling the production of such papers are within the Minister's purview to manage, not the courts' (para. 29).

Neither did Campbell J see why there should be an exercise of Court discretion to quash the demand. The Minister's position had always been that such papers were compellable, and the restraint with which it typically applied that policy was not binding (paras. 11, 13).

Arguments that the taxpayer effectively was being "conscripted" to audit itself were unpersuasive, as the working papers had already been prepared for other (accounting) reasons (para. 24). Although the papers had been prepared for what now were statute-barred years, their content remained relevant to subsequent years (para. 32).

Finally, as to whether the demand was unfair, Campbell J adopted (at para. 47) a statement of the Minister that:

...If the CRA does not uncover the tax positions in time, the shareholders of BP win, and the taxpayers of Canada lose. If the tax position is discovered and challenged by the CRA, the matter can ultimately be resolved by the Tax Court of Canada as to the propriety.

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Minister may compel the disclosure of tax accrual working papers
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