In MNR v. RBC Life Insurance Company et al., 2013 FCA 50, the Federal Court of Appeal held that the Minister of National Revenue could not use her authority under the Income Tax Act to demand information for the primary purpose of “chilling” a business. The Minister’s demand directed RBC Life Insurance Company to disclose records that would identify clients who had a specific insurance product, known as the “10-8 plan”, which had been the subject of review by the Canada Revenue Agency’s General Anti-Avoidance Rule Committee.
The Court held that the Minister acted improperly in two respects: by using her audit powers primarily for the purpose of “sending a message to the industry” rather than for a valid audit purpose; and by failing to provide full and frank disclosure to the Court.
This decision is an important precedent that helps set reasonable limits on the Minister’s substantial statutory authority to demand information. To learn more about the Court’s decision, please click here to read Patrick Lindsay’s article published in Tax Notes International.