Canada: Solicitor-Client Privilege and Tax Advice – Recent Cases

This article originally appeared in the August 13th issue of The Lawyers Weekly.

Several recent Canadian cases have dealt with the issue of whether documents and other information and communications involving tax advisers are privileged. This article surveys some of these recent cases.

Belgravia Investments Limited

In Belgravia Investments Limited v. Her Majesty the Queen, the CRA sought a number of documents from various taxpayers who had invested or were otherwise involved in an alleged tax shelter. The taxpayers applied to the Federal Court of Canada for a determination of solicitor-client privilege in relation to a large number of disputed documents.

In the course of his analysis, Justice Heneghan summarized various principles relevant to the determination of solicitor-client privilege. For example:

  • There are two distinct branches of solicitor-client privilege: litigation privilege and legal advice privilege.
  • Solicitor-client privilege derives from a client's right of confidentiality in respect of communications made in the context of a solicitor-client relationship for the purpose of obtaining legal advice.
  • An accountant's communications are privileged only if they are made as a result of a request by the client's lawyer to be used in connection with litigation, or where the accountant acts as the client's representative in placing a factual situation or problem before a lawyer to obtain legal advice or assistance.


In The Minister of National Revenue v. Kitsch, the CRA sought information regarding the tax motivation behind a series of transactions that allowed the taxpayers in question to deduct certain interest amounts prior to their emigration from Canada.

The Federal Court of Appeal upheld the trial judge’s conclusion that there is no class accountant-client privilege in Canada on the basis that, unlike for the legal profession, there is apparently an insufficient link between the accounting profession and the public interest in the administration of justice:

Lawyers are legally and ethically required to uphold and protect the public interest in the administration of justice. In contrast, accountants are not so bound. Nor do they provide legal advice, as to do so would constitute a breach of provincial and territorial laws governing the legal professions.

As for so-called 'case-by-case' accountant-client privilege, none of the established criteria for determining case-by-case privilege (the Wigmore principles) were met.

Fraser Milner Casgrain and Pitney Bowes

Fraser Milner Casgrain LLP v. MNR and Pitney Bowes of Canada Ltd v. The Queen each deal with whether so-called 'common interest privilege' can exist in respect of tax advice provided to both or all opposing parties in commercial transactions. The CRA sought production of such advice on the basis that any solicitor-client privilege that may have existed had been waived. The applicants argued that the documents in question were protected from disclosure by common interest privilege.

Although common interest privilege has its origins as a branch of litigation privilege, in both cases the court found little point in confining common interest privilege to the litigation context. In Pitney Bowes, the court recognized that

In many commercial transactions…[t]he sharing of legal opinions will ensure that each party has an appreciation of the legal position of the others and negotiations can proceed in an informed and open way... Such circumstances…create a presumption that the privilege attaching to the solicitor-client communications remains intact notwithstanding that they have been disclosed to other parties.

Lavallee, Rackel & Heintz

In The Queen v Lavallee, Rackel & Heintz the Supreme Court of Canada held that section 488.1 of the Criminal Code ("Code") violates Canada's constitutional protections against unreasonable searches and seizures. Section 488.1 contains a procedure for claiming solicitor-client privilege when an officer acting under the Code or any other federal legislation, such as the Income Tax Act ("Tax Act"), attempts to obtain a document from a lawyer who claims that the document is privileged. Lavallee was a consolidation of three separate appeals, one involving an attempt by Revenue Canada (a CRA predecessor) to obtain documents relevant to an investigation of tax evasion. Section 232 of the Tax Act contains a largely parallel procedure for claiming solicitor-client privilege.

A majority of the court felt that section 488.1 of the Code was too strong an interference with the privacy interests that underlie the concept of solicitor-client privilege, which "must remain as close to absolute as possible if it is to retain relevance". The majority described several shortcomings with section 488.1 and struck it down because "the constitutional infirmity of the provision" could not be cured. The court invited Parliament to redraft the provision. In the meantime, the court set out a series of principles to govern law office searches.

It will be interesting to see how Parliament deals with the parallel provisions in the Tax Act. In any event, one is left with a reaffirmation that solicitor-client privilege is a fundamental feature of the Canadian legal system that ought to be protected by Canada's highest law. One might reasonably expect that Parliament will want to redraft section 232 of the Tax Act so that it will withstand constitutional scrutiny.


Solicitor-client privilege is alive and well in Canada, and will be vigorously protected in litigation and non-litigation tax contexts. The cases also demonstrate that privilege will not be extended to tax-related communications involving accountants, unless there is a sufficiently strong link to legal advice provided by a lawyer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions