The Tax Act now provides that when the CRA wants
information held by one person (e.g. a charity) for the purpose of verifying
the tax compliance of unnamed persons (e.g. that charity’s donors), the CRA
must first get a court order without notice to anyone. Once the court order is obtained and the
demand made of the known person (e.g. the charity), that person has the ability
to review the information demand in court (with the information typically not
obtained by the CRA until the court review and any appeal are complete). The Federal Government believes that this
right of review delays CRA in obtaining information needed by it to allow it to
reassess. As a result, CRA will now be
required to notify the person with information before obtaining a court order
compelling disclosure of information relating to unnamed persons. The information holder will be able to
participate in the original CRA court application (although likely with little
notice), which should speed up CRA access when given.
This
change, notwithstanding that it is designed to allow CRA even easier access to
taxpayer information, should have the effect of allowing the Courts to make
better decisions on when to allow access.
