No Redemption From The Supreme Court

Background

On July 31, 2008, the Supreme Court of Canada ("SCC") delivered its reasons for judgment in Redeemer Foundation v. Canada (National Revenue)¹ ("Redeemer"). Redeemer addressed the Canada Revenue Agency's ("CRA") power to obtain records from taxpayers relating to third parties, under three provisions of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("Act"), namely, sections 230,² 231.1³ and 231.2. A majority of the SCC supported the CRA and substantially reduced the scope of ss. 231.2(2), a remedial provision intended to protect taxpayers.

The Canadian income tax system is a self-assessment system that largely depends on the honest reporting of taxpayers.⁴ To verify compliance, the CRA has broad powers to identify and take action against taxpayers. Subsection 231.2(1) allows the CRA to require any person to provide information or documents to administer or enforce the Act. However, pursuant to ss. 231.2(2), the CRA may not require a taxpayer to