Under the Income Tax Act, the Canada Revenue Agency (CRA) is authorised to inspect taxpayers' books and records, and require them to provide information and documents in the course of an income tax audit. However, the extent of the CRA's powers is defined by law and no provision in the Income Tax Act explicitly requires a taxpayer to submit to an oral examination, as opposed to providing answers in writing.


In the Minister of National Revenue v Cameco Corporation (2017 FC 763) decision, the minister of national revenue sought to compel 25 people to attend oral examinations as part of a transfer pricing audit of Cameco. Cameco agreed to provide answers to written questions posed by the CRA, but refused the demand for attendance and examination. The minister applied to the Federal Court for a compliance order, arguing that Section 231.1 of the Income Tax Act provides the authority to compel such examinations.


The court disagreed, holding that in the circumstances written answers were sufficient to provide the CRA with the information sought. In arriving at this result, it held that Section 231.1(1) "is not so wide as to compel an indeterminate number of people for oral interviews" and "does not provide the Minister with an unlimited right to conduct oral interviews".

The court's analysis highlights the problematic nature of the minister's position in that the CRA might be authorised to compel taxpayers to attend an examination as part of an audit. Indeed, the analysis provides strong support to the contrary. The court noted that if the minister had unlimited power to compel oral examinations as part of an audit, he or she would have the right to a much broader form of examination for discovery than that which is allowed under the Tax Court of Canada Rules Governing Tax Appeals. Further, under the proposed oral examinations, the procedural safeguards that exist under the Tax Court rules would be absent, namely:

  • the presence of counsel and a court reporter;
  • the ability to choose a single representative of the company to be examined; and
  • other procedural fairness rights.

One reason that Cameco refused the oral interviews was because it had agreed to oral interviews in past audits which were not recorded and, when those matters proceeded to the Tax Court, the CRA and Cameco had "very different recollections" of what had been said in the interviews.


The case was decided on the fact that the CRA's attempt to compel the attendance of 25 people for examination was significant and burdensome. However, if the law is principled, then interpretation of Section 231.1 should remain constant whether the CRA had attempted to compel the attendance of one person or 25. Indeed, reading Section 231.1 to find authority that would authorise the CRA to compel some – but not too many – people to attend an examination would strain any proper interpretation of that section.

In the absence of express statutory language, it would be extraordinary if the CRA was authorised to compel taxpayers to answer questions orally. Not only would the rules governing such a procedure be unknown, but the answers given by the taxpayer through this type of compelled interview could be used to advance a criminal investigation or prosecution under the rule in R v Jarvis (2002 SCC 73). This would engage constitutional issues which the Cameco court did not address.

A plain reading of the relevant provisions of the Income Tax Act reveals that the authority to compel an oral examination of a taxpayer (or other person in relation to a taxpayer) as part of an audit is not contained in the statutory language and, therefore, such a compulsion is beyond the reach of the CRA. It will be recalled that in BP Energy Company v Minister of National Revenue (2017 FCA 61) the appeal court considered and placed limitations on the minister's statutory authority to compel the production of certain types of document in an audit. In Cameco the court again instructed that the powers available to the minister are limited by law and taxpayers are entitled to the protection of that law.

For further information please contact Greg DelBigio or Jennifer Flood at Thorsteinssons LLP by telephone (+1 604 689 1261) or email (gpdelbigio@thor.ca or jflood@thor.ca). The Thorsteinssons LLP website can be accessed at www.thor.ca.

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