CRA Compelling Disclosure vs Anonymous Taxpayers Affirmed By Court

Introduction - CRA's Investigation Power under S. 231.2

Under section 231.2 of the Income Tax Act, the CRA has broad powers to compel third parties to disclose information related to Canadian taxpayers when carrying out enforcement of the Income Tax Act. Section 231.2 gives CRA the power to compel third parties to disclose taxpayer information even when the identity of the taxpayer in question is not known to the CRA. CRA's power to compel third-party disclosure against unnamed persons has been subject to considerable litigation, especially when the CRA is suspected to have made these disclosure requests as a part of a "fishing expedition" where they simply compel third party institutions such as banks, charities, and utility companies to disclose confidential tax information from a large number of taxpayers without any valid reason to suspect their income tax non-compliance.