There are very few rules in tax law that protect taxpayers. Most
are written to protect the Canada Revenue Agency and the
government. The doctrine of legal privilege is one of the few rules
that are intended to protect the legal system and preserve the rule
of law.
Legal privilege is essentially judge made law, which the
Income Tax Act attempts to legislatively mitigate.
Fortunately, the Supreme Court of Canada has resisted governmental
intrusions into the doctrine. However, taxpayers must know the
boundaries of legal privilege and protect it.
The law protects professional communications between a client
and his or her legal advisors. Legal secrecy is privileged from
unauthorized disclosure to third parties. This fundamental
doctrine, which is essential in tax planning and litigation, does
not extend to accountants.
