The Canada Revenue Agency (“CRA”) now has easier access to confidential taxpayer records as a result of a recent British Columbia Supreme Court decision, Canada Revenue Agency v. Canada Border Services Agency, 2013 BCSC 594.
The Canada Border Services Agency seized 90 boxes of documents, 18 computers and other media in relation to an alleged fraudulent immigration scheme. This seizure was conducted on the basis of an authorized search warrant. In turn, the CRA applied to the court, pursuant to s. 490(15) of the Criminal Code, for an order permitting the CRA to inspect the property seized and held by the CBSA. In support of its application, the CRA indicated that it believed the materials held by the CBSA would provide evidence of tax evasion and possibly fraud.
In contrast to the test for the issuance of a search warrant, which is reasonable and probable grounds for believing that evidence of an offence will be located in a specified location, a judge may grant an order pursuant to s. 490(15) to any person “who has an interest in what is detained”. Therefore, the test which must be satisfied pursuant to s. 490(15) is much less rigorous than the test for authorizing a warrant to search.
The individual whose materials had been originally seized by the CBSA argued, on the basis of the R. v. Jarvis, 2002 SCC 73, that because the CRA was conducting a criminal investigation, it could only obtain the materials it sought if it was able to establish the criminal standard of reasonable and probable grounds. The Court rejected this argument, deciding the case in favour of the CRA on the basis that it had an “interest in the seized materials”. In finding in favour of the CRA, the Court found that once property has been seized (in this instance, by the CBSA) there is a diminished expectation of privacy in that property and the standard of reasonable and probable grounds is therefore not applicable. Significantly, the Court also noted that the original warrant had not been challenged. The result is that the CRA may examine a taxpayer’s documents without the requirement that there be reasonable and probable grounds that the documents will be related to an offence.
This case addresses interesting legal issues and, for that reason, it is hoped that it will be appealed so that the issues may be further considered. In the meantime, and as a practice issue, it will be difficult to resist an application to examine documents first acquired pursuant to a warrant without attacking the underlying warrant itself.