On June 3, 2016, the Supreme Court of Canada released two
important decisions dealing with requests made by the Canada
Revenue Agency ("CRA") for information.
The cases highlight the fact that when an individual or an
organization receive such a request from CRA, they should consider
whether any of the information requested is subject to
solicitor-client privilege. If solicitor-client privilege applies,
the information should not be produced.
The two decisions are:
1. Canada (Attorney General) v. Chambre des notaires du
Québec, 2016 SCC 20; and
2. Canada (National Revenue) v. Thompson, 2016 SCC
Although neither case involved a charity or not-for-profit, the
cases are relevant as CRA can send those entities requests for
information under the Income Tax Act (Canada) (the
The central issue in both cases was whether the documents
requested had to be disclosed to CRA because they were subject to
solicitor-client privilege. When a document is subject to
solicitor-client privilege, this means that it is a communication
between a lawyer and his or her client. This gives the client the
right to refuse to disclose the particular communication on the
grounds that it is confidential. A lawyer cannot break
solicitor-client privilege, only the client has that right.
However, the Act states that solicitor-client privilege does not
apply where the document sought by CRA is a lawyer's accounting
record, including any supporting voucher or cheque.
The first case came about because CRA had been issuing requests
to notaries in Quebec asking for accounting documents and
information about their clients. The Chambre des notaries du
Québec brought a declaratory action to have the accounting
record exception in the Act declared unconstitutional. The Barreau
du Québec joined the proceedings for the purpose of ensuring
that any declaration that was made by the court would apply equally
to both notaries and lawyers.
In the proceedings, CRA maintained that the information it
sought fell within the accounting records exception in the Act and
contained information that was not privileged. The Chambre and
Barreau maintained that the accounting records exception was
unconstitutional and of no force or effect since a client's
right to solicitor-client privilege should prevail.
In the second case CRA requested various documents relating to
the personal finances of Mr. Thompson (a lawyer) as well as his
current accounts receivable listing. Mr. Thompson provided CRA with
certain information but he claimed solicitor-client privilege over
the details of his accounts receivables, as they included the names
of his clients.
In both cases, the Supreme Court of Canada found that the
accounting records exception relied on by CRA was unconstitutional.
Accounting records of notaries and lawyers are presumed to include
privileged information. If there is a dispute over whether a
particular document should be disclosed, a court would first have
to determine whether solicitor-client privilege actually applied to
the document. This requires a court to review the document and
consider a number of factors, including its contents and what it
might reveal about the relationship and communications between a
client and its legal advisor.
Receiving a request for information from CRA is a serious
matter. For a charity, the potential consequence of not complying
includes possible revocation of its charitable registration. A
charity or a not-for-profit organization could also be subject to
fines for failing to comply. If the request is addressed to a staff
member of an organization, that staff member could be subject to
fines and/or imprisonment if the request is ignored.
If your organization receives such a request from CRA, it is
important to consider the nature of the information you are being
requested to disclose and whether the documents are subject to
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.
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