In his Blog posting “Finance Releases Proposed Amendments” (15 July 2013), my colleague Ian Gamble discussed several of the legislative proposals recently made by the Minister of Finance.
The proposals also include suggested amendments to s.241 of the Income Tax Act (ITA) and related provisions in the Excise Act and Excise Tax Act that would significantly expand the authority for taxpayer information to be disclosed to law enforcement agencies where the information will afford evidence in a broad range of offences. These proposals have important implications for the manner and extent to which the current protections of the privacy interests in taxpayer information might be eroded.
Currently, s.241 of the ITA (also s.211 of the EA and s.295 of the ETA) prohibits taxpayer information from being disclosed, made available or used. This general prohibition, which is subject to certain specified exceptions, is a recognition of the privacy interests that exist in taxpayer information which is required to be produced to government and a further recognition of the importance of protecting those privacy interests.
The proposal would permit an official to provide taxpayer information to “a law enforcement officer of an appropriate police organization” where the official “has reasonable grounds to believe that the information will afford evidence” of acts or omissions, in or outside of Canada, of specified offences. The list of specified offences is very broad and, according to Explanatory Notes, the proposed amendment would permit CRA officials to disclose taxpayer information to foreign law enforcement agencies or officials.
If private taxpayer information is to be shared, it is appropriate that sharing not occur on anything less than the standard of reasonable and probable grounds. Further, if information is to be shared, it is also appropriate that a statutory framework define what may disclosed and the circumstances under which disclosure may be made. The disclosure of private taxpayer information and the resulting loss of privacy should not be left to the simple exercise of an individual’s discretion.
However, there are important questions that underlie the proposed amendments: Given that the law compels taxpayers to produce and provide information to the government, should this information be disclosed for law enforcement purposes? Should the amendments require record keeping of the taxpayer information that is disclosed and the entity to which it was disclosed so that there is some assurance of transparency and accountability? Should the taxpayer be given notice of an intention to disclose or of a disclosure so that he or she may challenge the lawfulness of the disclosure? Should the proposed amendments include provisions which would enable restrictions to be placed upon the use or further dissemination of the disclosed materials by the entity and, in particular, upon any foreign law enforcement agency that might receive the materials?
Should the amendments become law in their present form, these are but a few of the questions that might well occupy the courts in the litigation that will almost certainly ensue.