Canada: Canadian Federal Court pulls the reins in (slightly) on foreign information requests

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Canadian Federal Court pulls the reins in (slightly) on foreign information requests

Gagnon-Jean-Marc
Carbone-Alexandra

Jean Marc Gagnon

Alexandra Carbone

In Amdocs Canadian Managed Services Inc. (ACMS), the Federal Court denied the Canada Revenue Agency's (CRA) request under section 231.7 of the Income Tax Act, Canada (Act) to compel ACMS to provide the CRA with documents and information requested in the course of a transfer pricing audit.

The CRA alleged that queries had not been satisfactorily answered, leaving the CRA in a position where it would have to audit and assess ACMS based on incomplete information.

ACMS contended that although the documents requested were not within its control, it had taken reasonable steps to obtain the information and provide it to the CRA. ACMS submitted that it could not be compelled to provide documents that are not in its possession or control or to create documents that did not exist. If such documents existed, they were located outside Canada, outside ACMS's control and did not fall within the provisions supporting the CRA's application.

The judge noted that it is within the CRA's prerogative to request information over the course of the audit, and found that ACMS had failed to comply in this regard. He also found that ACMS had made reasonable efforts to acquire the documentation at issue, thereby falling within an exception to complying with information requests. Noting that there was no purpose in ordering ACMS to do something it could not do, the judge declined to grant the CRA the relief sought.

Although the taxpayer was successful in this case, the judge acknowledged the CRA's broad discretion to request information from taxpayers during an audit and that other provisions of the Act would have better served CRA's interest. The CRA may have to be more accepting of taxpayers that have made reasonable efforts to comply with its requests but are unable to do so, or be more specific in its information requests.

Jean Marc Gagnon (jean.gagnon@blakes.com) and Alexandra Carbone (alexandra.carbone@blakes.com)

Blake, Cassels & Graydon

Tel: +1 514 982 5025 and +1 514 982 5034

Website: www.blakes.com

more across site & shared bottom lb ros

More from across our site

Recent news of job cuts at EY is symptomatic of how the PwC controversy has tarnished the reputation of the entire ‘big four’
Experts reportedly discussed extending the safe harbour to 2027 to give countries more time to legislate; in other news, Baker McKenzie and Greenberg Traurig made senior tax hires
Awards
Submit your nominations to this year's WIBL Americas Awards by January 23
Recent changes in UK tax rules and cross-border requirements are generating high demand for specialist advice, according to MHA
Hany Elnaggar examines how Gulf Cooperation Council countries are internalising transfer pricing norms within evolving fiscal systems shaped by both Islamic and international influences
Where a TP study of comparables produces an arm’s-length range, and the taxpayer’s filed position is outside that range, HMRC will adjust to the median by default
EY, KPMG, Deloitte, and PwC have all seen a decrease in public sector contracts since the scandal – it is understood
Consoli, a tax partner at Brazilian law firm Martinelli Advogados, tells ITR about the importance of staying at the coalface and constantly learning
Despite legislative gridlock, international investors should be wary of legal precedents set by recent court rulings, which could substantially alter the Spanish tax environment
The new outfit, Ashurst Perkins Coie, will bring together around 3,000 lawyers across 23 countries
Gift this article