Bill C-60: Amending the Audit Process

On April 29, the Minister of Finance, Jim Flaherty, introduced Bill C-60 to Parliament which proposes to implement certain provisions of the March 21, 2013 federal budget.

Among these provisions are proposed legislative amendments that pertain to the audit process in the Income Tax Act, and provisions in the Tax Court of Canada Rules regarding the General Procedure. These proposals will be discussed in a four- part series in Knowledge Bureau Report which begins today and at the Distinguished Advisor Workshops travelling across the country this week with Evelyn Jacks and Alan Rowell.  There is still time to enrol in the Vancouver session on May 24 and for the Toronto session on May 27.

Part 1 - Amending the Audit Process 

During the course of an audit, the Canada Revenue Agency (CRA) can compel a taxpayer to provide certain documents, but subsection 231.2(2) of the Income Tax Act (the Act) currently requires them to obtain a court order first if the information they seek relates to unnamed persons. Subsection 231.2(3) of the Act provides the procedure for the CRA and currently allows them to apply ex parte (unopposed) to a judge for an order authorizing the release of such information. If the application is granted, the affected party only has 15 days to apply for judicial review of the decision. Bill C-60 proposes to remove the ex parte aspect of the application; therefore, the CRA would have to give notice to any affected party before seeking information pertaining to them. When this legislation is implemented, the affected party will not be able to apply for judicial review of the decision, but instead will have to appeal to the Federal Court.

Changes to this area of the Act are welcomed because they should provide for a more streamlined process for these types of applications. Also, the changes are fair, allowing those affected by the release of such information to be notified, and giving taxpayers more time to appeal to the court.

Next time: Part 2 – Changes to the Tax Court Rules