[2012] 1 F.C.R. D-10
Income Tax
Practice
Consolidated motions to cancel ex parte orders issued pursuant to Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 231.2(3) authorizing Minister of National Revenue to impose on respondents requirements to produce certain information, documents relating to identities of holders of insurance leveraging strategies (10-8 plans)—Minister producing internal documents to ascertain whether full, frank disclosure at time of ex parte applications made—Principal issues whether: (1) Minister failing to make full, frank disclosure in ex parte applications; (2) requirements obtained for purpose of verifying compliance with Act—Issue 1: Minister falling short of obligation to make full, frank disclosure—Not disclosing information provided by respondents prior to ex parte applications, internal documents suggesting that 10-8 plans complying with letter, spirit of Act—Internal documents revealing that Minister undertaking “audit blitz” to send message to insurance industry—Federal Courts Rules, SOR/98-106, r. 399 giving Court inherent power to cancel authorization previously issued based on lack of disclosure—If information not before Judge, ex parte applications becoming rubber stamp exercise, Court not effectively exercising discretion—Issue 2: Minister’s central purpose in issuing requirements not sufficiently tied to valid audit purpose—Targeted audit of specific 10-8 plan holders done to send message to industry—Sending message not valid enforcement purpose under Act, s. 231.2(3)(b)—Requirements not necessary to verify compliance with Act—Using s. 231.2 to pursue policy objectives rather than to enforce tax obligations misuse of Minister’s powers—Not open to Minister to seek ex parte authorization under pretence of verifying compliance with Act when true purpose to achieve through audits what Department of Finance refusing to do through legislative amendment—Motions allowed.
Canada (National Revenue) v. RBC Life Insurance Company (T-1619-09, T-484-10, T‑485-10, T-879-10, 2011 FC 1249, Tremblay-Lamer J., judgment dated November 1, 2011, 26 pp.)