Canada Trustco Mortgage Co. v. Canada: Focus On Financial Institutions

It is not often that the Supreme Court of Canada grants leave to appeal a decision relating to the Income Tax Act (ITA) or the law relating to how cheques are processed and paid. It is even less common when both the trial and appellate courts were in agreement. Canada Trustco Mortgage Co. v. Canada is one of those rare cases and should be of interest to financial institutions that are involved with the processing and payment of cheques.

In Canada Trustco Mortgage Co. v. Canada, the specific issue before the Court was whether the act of delivering a cheque drawn by a tax debtor for deposit into a joint account constitutes a demand for payment of the cheque sufficient to require the appellant, Canada Trustco Mortgage Co. (Bank), to remit the proceeds of the cheque to the Canada Revenue Agency (CRA) pursuant to section 224(1) of the ITA. Section 224(1) of the ITA is a summary procedure that gives the CRA extraordinary power to garnish funds payable to a tax debtor