Canada: Release of taxpayer information to Police
01 August 2014
Posted by: Author: Melanie Kneis
Author: Melanie Kneis (Ernst & Young LLP)
New subsection 241(9.5) of the Act, enacted with the rest of Bill C-31 in June 2014, allows a CRA official to disclose taxpayer information to police when the official has reasonable grounds to believe that the information will provide evidence of certain serious crimes.
Subsection 241(1) prohibits a CRA official (or other representative of a government) from knowingly providing or communicating taxpayer information to any person except as otherwise expressly permitted under section 241. An exception is provided in paragraph 241(3)(a), which permits disclosure in respect of criminal proceedings that have been commenced by the laying of charges under an act of Parliament. Paragraph 241(4)(a) permits disclosure for the purposes of administration and enforcement of the Act and federal statutes involving payroll taxes. Thus, the CRA previously could not share taxpayer information with law enforcement authorities in non-tax matters until a charge had been laid.
Subsection 241(9.5) allows a CRA official to provide taxpayer information to a law enforcement officer of an appropriate police organization—domestic or foreign—if the official has reasonable grounds to believe that the information affords evidence of an act or omission committed in or outside Canada that, if committed in Canada, would be an offence under specified provisions of the Criminal Code or the Corruption of Foreign Public Officials Act. According to the technical notes, the requirement of "evidence” means that mere suspicion is not enough. The specified offences include bribery and corruption of public officials; sexual assault; kidnapping; money laundering; terrorism or criminal organization offences; and the trafficking, production, and import and export of drugs.
The subsection was introduced in response to an October 14, 2010 recommendation of the OECD that member states establish, in accordance with their legal systems, an effective legal and administrative framework and provide guidance to facilitate reporting by tax authorities of suspicions of serious crimes (including money laundering and terrorism financing) arising out of the performance of their duties to the appropriate domestic law enforcement authorities. The OECD stated that tax crimes, money laundering, and other financial crimes, which thrive under weak inter-agency cooperation, can threaten the strategic, political, and economic interests of developed and developing countries. The 2010 recommendation is one of many put forward by the OECD to combat financial crimes.
One problem with the new provision is the absence of judicial oversight, even if the information is to be disclosed to a foreign police organization; a similar provision in the Tax Administration Act (Quebec) (section 126.96.36.199) requires that Revenu Québec employees obtain judicial authorization to disclose taxpayer information in such circumstances.
Although the minister of finance has indicated that the administration of the new measures will be closely controlled within the CRA, it remains to be seen what policies will be put in place to ensure that the provision is applied in a manner consistent with its intended purpose and restricted to circumstances where reasonable cause exists.
This article first appeared on ctf.ca.