https://decisia.lexum.com/fca-caf/decisions/en/item/307825/index.do
Bauer v. Canada (March 27, 2018 – 2018 FCA 62, Webb (author), Near, Laskin JJ.A.).
Précis: In the Tax Court the taxpayer unsuccessfully sought to strike portions of the Reply that related to documents acquired by the Crown pursuant to requirements. The requirements had been issued by the same CRA investigator who was investigating the taxpayer for possible criminal offences under the Income Tax Act. The taxpayer appealed to the Federal Court of Appeal which dismissed his appeal holding that “it is plain and obvious that the CRA’s power to issue requirements under section 231.2 of the ITA to obtain information or documents that will be used for the administrative purpose of reassessing a taxpayer is not suspended by the commencement of an investigation” [para. [17]]. The appeal was dismissed with costs.
Decision: This decision upheld the decision of the Tax Court which was blogged earlier on this site. The decision essentially affirms the well-known principle that Jarvis arguments cannot be used to exclude evidence in civil tax appeals:
[12] Mr. Bauer’s argument is that his case can be distinguished from Romanuk on the basis that while the audit powers remain in effect following the commencement of an investigation, these powers cannot be exercised by the same person who is doing the investigation related to section 239 of the ITA. In my view this distinction is not material. If the powers can be exercised by two different individuals at CRA there does not seem to be any reason why the powers cannot be exercised by the same person at CRA. In each case the question will be whether the documents obtained are to be used for administrative purposes or for the purposes of a prosecution under section 239 of the ITA.
[13] In my view, even though an investigation had commenced that could lead to charges being laid under section 239 of the ITA, this does not preclude the CRA from using requirements to obtain information or documents that could be used only in relation to the reassessments. Both the reassessments and any charges under section 239 of the ITA ultimately relate to the underlying tax liability of the taxpayer. Therefore, there is a common element in both matters –the determination of the unreported income of the taxpayer for a particular year. Common facts will be needed for both the administrative reassessment and the penal charges under section 239 of the ITA.
[14] While using requirements under section 231.2 of the ITA to obtain information or documents after an investigation has commenced may result in that information or those documents not being admissible in a proceeding related to the prosecution of offences under section 239 of the ITA, it does not preclude that information or documents from being admissible in a Tax Court of Canada proceeding where the issue is the validity of an assessment issued under the ITA. It is the use of the information or documents that is relevant, not who at CRA issued the requirement for information or documents.
In the result the appeal was dismissed with costs.