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ARTICLE · 26 SEPTEMBER 2017

Minister's Audit Request Failed To Meet Proportionality Principle

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Sanity prevailed in a recent Federal Court ("FC") decision involving an application by the Minister of National Revenue ("Minister") to compel a taxpayer to produce approximately 25 employees...

CanadaTax
John Sorensen
John Sorensen
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Overview

Sanity prevailed in a recent Federal Court ("FC") decision involving an application by the Minister of National Revenue ("Minister") to compel a taxpayer to produce approximately 25 employees for interviews as part of an audit.  The FC held in favour of the taxpayer in Cameco Corporation v Canada (National Revenue), 2017 FC 763 ("Cameco") and dismissed the Minister's application for a compliance order on the basis that the Minister's broad audit powers are not unlimited and the request to interview that many employees did not meet the principle of proportionality.

Background and Arguments

The Minister made three requests to interview Cameco personnel in the context of to a transfer pricing audit of its 2010 through 2012 taxation years, relying on s. 231.1 of the Income Tax Act (Canada) ("ITA").  The issues under audit were the same as those currently being litigated before the Tax Court of Canada ("TCC") for previous years.  Evidently, Cameco fully

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