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Federal Tax - Information-Gathering. Canada (National Revenue) v. Zeifmans LLP
In Canada (National Revenue) v. Zeifmans LLP (Fed CA, 2026) the Federal Court of Appeal considered ITA s.231.2 ['Requirement to provide documents or information'], and where the ITA s.231.2(3) 'judicial authorization' requirement applies:III. Statutory Provisions – Section 231.2 and Section 231.7
[22] Section 231.2 of the ITA confers broad powers on the Minister to obtain information or documents. It provides that the Minister may issue a requirement to any person to provide information or documents for any purpose related to the administration or enforcement of the ITA, tax treaties and listed international agreements. Subsection 231.2(1) is expressly subject to subsection 231.2(2), which provides that the Minister must obtain prior judicial authorization under subsection 231.2(3) when the requirement relates to one or more "“unnamed persons”".
[23] At the relevant time, section 231.2 of the ITA read as follows:"Requirement to provide documents or information"
"Production de documents ou fourniture de renseignements"
"231.2 (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act (including the collection of any amount payable under this Act by any person), of a listed international agreement or, for greater certainty, of a tax treaty with another country, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as is stipulated in the notice,"
"231.2 (1)"" Malgré les autres dispositions de la présente loi, le ministre peut, sous réserve du paragraphe (2) et, pour l’application ou l’exécution de la présente loi (y compris la perception d’un montant payable par une personne en vertu de la présente loi), d’un accord international désigné ou d’un traité fiscal conclu avec un autre pays, par avis signifié à personne ou envoyé par courrier recommandé ou certifié, exiger d’une personne, dans le délai raisonnable que précise l’avis :"
"(a) any information or additional information, including a return of income or a supplementary return; or"
"a)"" qu’elle fournisse tout renseignement ou tout renseignement supplémentaire, y compris une déclaration de revenu ou une déclaration supplémentaire;"
"(b) any document."
"b)"" qu’elle produise des documents."
"Unnamed persons"
"Personnes non désignées nommément"
"(2) The Minister shall not impose on any person (in this section referred to as a “third party”) a requirement under subsection 231.2(1) to provide information or any document relating to one or more unnamed persons unless the Minister first obtains the authorization of a judge under subsection 231.2(3)."
"(2)"" Le ministre ne peut exiger de quiconque — appelé « tiers » au présent article — la fourniture de renseignements ou production de documents prévue au paragraphe (1) concernant une ou plusieurs personnes non désignées nommément, sans y être au préalable autorisé par un juge en vertu du paragraphe (3)."
"Judicial authorization"
"Autorisation judiciaire"
"(3) A judge of the Federal Court may, on application by the Minister and subject to any conditions that the judge considers appropriate, authorize the Minister to impose on a third party a requirement under subsection (1) relating to an unnamed person or more than one unnamed person (in this section referred to as the “group”) if the judge is satisfied by information on oath that"
"(3)"" Sur requête du ministre, un juge de la Cour fédérale peut, aux conditions qu’il estime indiquées, autoriser le ministre à exiger d’un tiers la fourniture de renseignements ou la production de documents prévues au paragraphe (1) concernant une personne non désignée nommément ou plus d’une personne non désignée nommément — appelée « groupe » au présent article —, s’il est convaincu, sur dénonciation sous serment, de ce qui suit :"
"(a) the person or group is ascertainable; and"
"a)"" cette personne ou ce groupe est identifiable;"
"(b) the requirement is made to verify compliance by the person or persons in the group with any duty or obligation under this Act."
"b) ""la fourniture ou la production est exigée pour vérifier si cette personne ou les personnes de ce groupe ont respecté quelque devoir ou obligation prévu par la présente loi." ....
B. Did the Federal Court err in interpreting the law on when prior judicial authorization is required?
[32] Subsection 231.2(2) provides that a requirement issued to a person under subsection 231.2(1) to provide any information or document relating to unnamed persons—colloquially known as an unnamed persons requirement—needs prior judicial authorization under subsection 231.2(3).
[33] Subsection 231.2(2) must be read in conjunction with subsection 231.2(3), which sets out the necessary conditions for prior judicial authorization of an unnamed persons requirement. Subsection 231.2(3) provides that, on application by the Minister, a Federal Court judge may grant authorization provided the judge is satisfied that the unnamed person or group of unnamed persons is ascertainable, and that the requirement is made "“to verify compliance by the person or persons in the group with any duty or obligation under [the ITA]”".
[34] The need for prior judicial authorization has its roots in a desire to limit "“fishing expeditions”": James Richardson & Sons v. M.N.R., 1984 CanLII 1 (SCC), [1984] 1 S.C.R. 614 (S.C.C.); M.N.R. v. Sand Exploration Ltd., 1995 CanLII 3599 (FCTTD), [1995] 3 F.C. 44 at p. 52 (F.C.) (per Rothstein J., as he then was); Artistic Ideas at para. 9; M.N.R. v. Greater Montréal Real Estate Board, 2007 FCA 346 at para. 45 [GMREB], leave to appeal ref’d 2008 CanLII 18937 (S.C.C.); Roofmart Ontario Inc. v. Canada (National Revenue), 2020 FCA 85 at para. 45 [Roofmart].
[35] An unnamed persons requirement may be sought when, for example, the Minister wishes to verify tax compliance by a group of similarly situated taxpayers in a sector-wide audit but is unaware of their identities. The requirement is issued to a person who may be able to identify the unnamed persons and provide information about them. Examples of these types of unnamed persons from the case law include customers of a building materials supplier (Roofmart); purchasers of a life insurance product (Canada (National Revenue) v. RBC Life Insurance Company, 2013 FCA 50 [RBC]), real estate agents in a region of Quebec (GMREB), and, recently, merchants served by Shopify (Minister of National Revenue v. Shopify, 2025 FC 968 & 2025 FC 969, under appeal, A-240-25 & A-241-25 (F.C.A.)).
[36] This case does not involve that kind of unnamed persons requirement. The issue of prior judicial authorization arises because the Requirement issued to Zeifmans regarding the Vaturis and Nader Ghermezian also requested information and documents regarding unnamed persons. Not all the Unnamed Persons were unknown to the Minister. As the Minister explained to the Federal Court, these parties were not named because it would have been an "“overly complicated”" requirement, and they were not certain of all the relationships: FC Reasons at para. 132. Had the Minister named the Connected Entities (or, it would seem, even just those under audit, as addressed below), prior judicial authorization would not be in issue.
(1) Redeemer Did Not Overtake Artistic Ideas
[37] Both parties rely on Artistic Ideas and Redeemer Foundation v. Minister of National Revenue, 2008 SCC 46 [Redeemer] as authority for their opposing positions.
[38] In Artistic Ideas, the Minister commenced an audit of Artistic Ideas Inc. (Artistic Ideas), a company that arranged the sale of artwork to individual Canadian taxpayers who in turn donated the artwork to registered charities and claimed a tax credit regarding the donation. During the audit, the Minister served Artistic Ideas with a requirement under subsection 231.2(1), seeking the names of the donors and the charities.
[39] This Court (per Rothstein J.A., as he then was) held that that prior judicial authorization was required to obtain the names of the charities, but not the names of the donors. This was because "“subsection 231.2(2) only pertains to those unnamed persons in respect of whom the Minister may obtain an authorization of a judge under subsection 231.2(3)”", namely, persons whom the Minister is investigating to verify their compliance under the ITA: Artistic Ideas at para. 11. Therefore, if a requirement requests information relating to unnamed persons to verify their compliance under the ITA, judicial authorization is required. However, if the requirement asks for information relating to unnamed persons only to verify the named persons’ compliance under the ITA, judicial authorization is not required: Artistic Ideas at paras. 10-12; see also eBay Canada Ltd. v. M.N.R., 2008 FCA 348 at para. 23 [eBay], citing Bernick v. The Queen, 2002 D.T.C. 7167 at para. 10, 2002 CanLII 49657 (Ont. S.C.J.).
[40] The test in Artistic Ideas has been upheld in decisions of this Court. In Zeifmans JR (FCA), this Court found that the Minister’s interpretation of section 231.2 of the ITA was "“consistent at a conceptual level”" with binding decisions of this Court in Artistic Ideas and eBay and numerous Federal Court decisions that have followed Artistic Ideas, and that Artistic Ideas and its progeny correctly interpret section 231.2: Zeifmans JR (FCA) at paras. 5-6; see also Ghermezian Compliance (FCA) at para. 59.
[41] The appellant submits that Redeemer has overtaken Artistic Ideas and subsequent binding decisions of this Court that have followed Artistic Ideas.
[42] In Redeemer, at issue was a request for documents under section 231.1 from a taxpayer under audit. The Redeemer Foundation was under audit for issuing questionable charitable receipts and the CRA requested a list of donors. As the donors were "“unnamed persons”", one of the issues was whether prior judicial authorization was required, notwithstanding that the request was pursuant to section 231.1, and not section 231.2. A majority of the Supreme Court concluded that, on the facts, the CRA needed the donor list to investigate the Foundation’s status as a registered charity, and any reassessment of the donors would simply be a logical consequence of the Foundation being found not to be a valid charity. The Court found that the Minister was entitled to the documents under section 231.1 (and paragraph 230(2)(a)) and did not have to rely on section 231.2.
[43] Section 231.1 does not have an analogue to subsection 231.2(2) requiring prior judicial authorization, and one of the issues addressed by the Court was whether the Minister could avoid the need for prior judicial authorization by relying on section 231.1 and not section 231.2 for the requested information. Artistic Ideas was not considered by the Supreme Court.
[44] In the passage of Redeemer relied on by the appellant, and often cited in cases considering subsection 231.2(2), the majority stated (at para. 22):The s. 231.2(2) requirement should not apply to situations in which the requested information is required in order to verify the compliance of the taxpayer being audited. Regardless of whether or not there is a possibility or a probability that the audit will lead to the investigation of other unnamed taxpayers, the CRA should be able to obtain information it would otherwise have the ability to see in the course of an audit. [45] It is essential to remember that Redeemer was about the Minister’s power to obtain documents regarding unnamed persons under section 231.1 (and paragraph 230(2)(a)), not under subsection 231.2(2). It is why this passage is often referred to as obiter regarding subsection 231.2(2).
[46] The appellant submits that Redeemer confirms that prior judicial authorization is not necessary if the "“primary purpose”" of issuing a requirement is the audit or investigation of the named persons. On their theory, this would hold even if unnamed persons were investigative targets and one of the purposes of the requirement, albeit a secondary purpose, was to verify the unnamed persons’ compliance under the ITA.
[47] Redeemer does not support this position. When paragraph 22 is read in the context of the rest of the majority’s reasons and the arguments raised by the parties, it can be interpreted as a comment that prior judicial authorization under subsection 231.2(2) "“should not apply”" when "“the requested information is required in order to verify the compliance of the taxpayer being audited”" because, in that circumstance, the Minister could rely on section 231.1. Nothing more.
[48] At most, paragraph 22 of Redeemer relates to the scope of subsection 231.2(2) but is obiter. Even so, it is conceptually consistent with the purpose test articulated in Artistic Ideas. Prior judicial authorization is not needed where the requested information, including regarding unnamed persons, is sought to verify the compliance under the ITA of the taxpayer being audited (i.e., a named person). Prior judicial authorization is needed where the information is sought to verify the compliance of unnamed persons.
[49] I agree with the Federal Court that Redeemer did not establish a "“primary purpose”" test and thus overtake the test in Artistic Ideas. Nor did any other decision interpreting subsection 231.2(2) that is binding on this Court establish a "“primary purpose”" test. The appellant relies on various passages from Zeifmans JR (FC), Zeifmans JR (FCA), Ghermezian JR (FC), Ghermezian Compliance (FC) and Ghermezian Compliance (FCA), but these do not support its position. These cases, although they considered Redeemer, confirmed that the relevant comments are obiter, "“consistent at a conceptual level”" with Artistic Ideas and post-Redeemer jurisprudence from this Court: Zeifmans JR (FCA) at para. 5; Ghermezian Compliance (FCA) at para. 59; see also Zeifmans JR (FC) at para. 44; Ghermezian JR (FC) at para. 39.
[50] While the Federal Court in the Ghermezian Compliance Proceedings relied on a notion of "“primary purpose”" (i.e., judicial authorization is not required if the requirement is issued to seek information primarily for the purposes of verifying the compliance of named persons), that approach was not endorsed by this Court on appeal, which instead formulated the test in accordance with Artistic Ideas: see Ghermezian Compliance (FC) at paras. 253-59, 326, 332; Ghermezian Compliance (FCA) at paras. 54-60.
[51] Accordingly, I reject the appellant’s argument that a "“primary purpose”" of verifying named persons’ tax compliance obviates the need for prior judicial authorization. I find that the notions of "“primary”" and "“secondary”" purpose confuse more than clarify. In my view, if a purpose of a requirement is to seek information and documentation regarding unnamed persons in order to verify their compliance with the ITA, prior judicial authorization is needed. As explored further below, I conclude that was not the case here.
(2) Purpose, Not Audit Status, Is the Focus of the Artistic Ideas Test
[52] The appellant says that the Federal Court erred in interpreting subsection 231.2(2) by focusing on the audit status of the Unnamed Persons instead of the Minister’s purpose in issuing the Requirement, contrary to the text of subsections 231.2(2) and (3) and the decisions in Redeemer and Artistic Ideas. The appellant says that while some of the Unnamed Persons were under audit, the Requirement was issued for the purpose of the Named Persons’ audits, and accordingly, prior judicial authorization was not needed.
[53] The respondent submits that the Federal Court correctly interpreted section 231.2, considered both the audit status of Unnamed Persons and the Minister’s purpose and found that judicial authorization was required.
[54] I agree with the appellant that the test in Artistic Ideas looks to the Minister’s purpose, meaning the intended use of the information or documents sought in a requirement.
[55] The Federal Court considered the Minister’s purpose in issuing the Requirement and applied the test in Artistic Ideas. However, having found that the Requirement was issued for the purpose of furthering the audits of Unnamed Persons, the Federal Court concluded that prior judicial authorization was required. The Federal Court’s factual error on the Minister’s purpose is addressed below.
[56] The Federal Court also focused on the audit status of Connected Entities. Evidence of the audit status of Connected Entities was not before the Courts in the JR Proceedings and yet played a central part in the Federal Court’s reasons in the Compliance Proceedings. The Federal Court concluded that since Unnamed Persons were and continued to be an investigation target or under audit, the Minister was required to obtain prior judicial authorization: FC Reasons at paras. 125, 131. While the Federal Court’s reasons are not entirely clear, its conclusion appears to have been based at least in part on a misinterpretation of Artistic Ideas and subsequent cases discussing the relevance of the investigative or audit status of unnamed persons to the need for prior judicial authorization. The reasoning appears to be that whenever unnamed persons are under audit, a requirement seeking information about those unnamed persons automatically requires prior judicial authorization under Artistic Ideas. That is a legal error.
[57] In Artistic Ideas, the Court clarified that if the Minister seeks to identify unnamed persons who are not themselves "“under investigation”" or "“intended to be the subject of an investigation”" as to their tax compliance, prior judicial authorization is not required because, "“[p]resumably”", the names of unnamed persons (and by extension any other information and documents relating to those unnamed persons) are necessary solely for the Minister’s investigation of the named persons. In contrast, where the unnamed persons "“are intended to be the subject of investigations by the Minister […] [t]hey are precisely the persons to whom subsections 231.2(2) and (3) apply”": Artistic Ideas at paras. 10-11.
[58] These passages of Artistic Ideas confirm the critical importance of the Minister’s purpose in seeking the information or documents. I have concerns with the test in Artistic Ideas being framed as whether an unnamed person is simply "“under audit”" or an "“investigative target”": see e.g. FC Reasons at paras. 125, 131 without further analysis of the Minister’s purpose as, for example, reflected in an information sheet. In my view, active audit or investigative status may well be relevant, but only if it reflects the Minister’s purpose for issuing the requirement.
[59] Artistic Ideas does not say that where an unnamed person is under investigation or audit, a requirement seeking information or documents relating to that unnamed person is necessarily sought for the purpose of that investigation or audit, or that the need for prior judicial authorization automatically follows. The question is always "“Whose compliance under the ITA is the Minister seeking to verify?”" If the requirement seeks information regarding only unnamed persons, that may be a simpler inquiry than if the requirement seeks information regarding both named and unnamed persons. In the latter case, if the information requested regarding the unnamed persons is sought to investigate their compliance, prior judicial authorization is required. If the information is requested to investigate named persons’ compliance, and it is purely coincidental or incidental that the unnamed persons are under audit, prior judicial authorization is not required. At paras 61-97 the court assesses the facts of the case on this law.
. Ghermezian v. Minister of National Revenue
In Ghermezian v. Minister of National Revenue (Fed CA, 2023) the Federal Court of Appeal considered an appeal from Federal Court ITA s.231.7 'compliance orders' made in relation to Ministerial 'demands' under ITA s.231.1 ["Information gathering"] and s.231.2 ["Requirement to provide documents or information"]. At paras 14-42 the court considers an issue concerning the procedure accompanying ITA s.231.1:[9] The appellants appeal the February 2022 judgment of the Federal Court (A-65-22) as well as the six subsequent compliance orders issued in July 2022 (A-151-22). While they raised other grounds in their notices of appeal, the appellants submit in their amended memorandum of fact and law that the Federal Court erred in holding that subsection 231.1(1) of the ITA empowered the Minister to compel the production of documents without physically attending the appellants’ business premises. ...
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