Artistic Ideas Inc. v. Canada Customs and Revenue Agency, 2004 FC 573

• Judge: Snider, J.
• Court: Federal Court (Canada)
• Case Date: March 31, 2004
• Jurisdiction: Canada (Federal)
• Citations: 2004 FC 573;(2004), 251 F.T.R. 223 (FC)

Artistic Ideas Inc. v. CCRA (2004), 251 F.T.R. 223 (FC)

MLB headnote and full text

Temp. Cite: [2004] F.T.R. TBEd. AP.042

Artistic Ideas Inc. (applicant) v. Canada Customs and Revenue Agency (respondent)

(T-1141-02; 2004 FC 573)

Indexed As: Artistic Ideas Inc. v. Canada Customs and Revenue Agency

Federal Court

Snider, J.

April 16, 2004.

Summary:

The applicant arranged the sale of artwork to individual taxpayers (the Donors) who donated them to registered charities (the Charities). The Donors obtained a tax benefit from such donations based on the difference between the appraised value of the works of art and what the Donors paid for them. The transactions were sometimes referred to as "art flips". Canada Customs and Revenue Agency began an audit of the applicant. A Tax Avoidance Officer served a Requirement on the applicant to provide certain documents pursuant to s. 231.2(1) of the Income Tax Act, including the names of the Donors and the Charities. The applicant applied for an order striking the portion of the Requirement that required the applicant to provide the names and addresses of the Donors and Charities without prior judicial authorization.

The Federal Court set aside that part of the Requirement which purported to require the applicant to provide the names and addresses of the Donors without prior judicial authorization pursuant to s. 231.2(2) of the Act. The Requirement as it related to disclosure of the names and addresses of the Charities was valid pursuant to s. 231(1) and no judicial authorization was necessary.

Income Tax - Topic 9258

Enforcement - Production of information - Demand of information - Respecting unnamed persons - The applicant arranged the sale of artwork to individual taxpayers (the Donors) who donated them to registered charities (the Charities) - The Donors obtained a tax benefit from such donations based on the difference between the appraised value of the works of art and what the Donors paid for them - The transactions were sometimes referred to as "art flips" - Canada Customs and Revenue Agency began an audit of the applicant - Tax Avoidance Headquarters in Ottawa also commenced a broad investigation to identify and reassess donors involved in the art flips - A Tax Avoidance Officer served a Requirement on the applicant to provide certain documents pursuant to s. 231.2(1) of the Income Tax Act, including the names of the Donors and the Charities - The Federal Court held that while the audit of the applicant was a genuine and serious inquiry into its tax liability and the names of the Donors and Charities might be relevant to that inquiry, the Minister was only entitled to demand disclosure of the names and addresses of the Donors by obtaining prior judicial authorization pursuant to ss. 231.2(2) and (3) - The Minister did not deny her interest in obtaining the names of the Donors and in recommending that they be reassessed - Therefore, there was a factual basis for asserting a right of redaction in respect of the Donors - In the absence of any clear evidence with respect to any potential audit of the Charities, disclosure of the names of the Charities was a valid part of the Requirement without prior judicial authorization.

Cases Noticed:

Richardson (James) & Sons Ltd. v. Minister of National Revenue, [1984] 1 S.C.R. 614; 54 N.R. 241, consd. [para. 8].

Tower et al. v. Minister of National Revenue et al. (2003), 310 N.R. 280 (F.C.A.), reving. (2002), 223 F.T.R. 32 (T.D.), consd. [para. 8].

R. v. McKinlay Transport Ltd. and C.T. Transport Inc., [1990] 1 S.C.R. 627; 106 N.R. 385; 39 O.A.C. 385, refd to. [para. 17].

AGT Ltd. v. Canada (Attorney General), [1996] 3 F.C. 505; 115 F.T.R. 1 (T.D.), affd. [1997] 2 F.C. 878; 211 N.R. 220 (F.C.A.), leave to appeal dismissed (1997), 224 N.R. 396 (S.C.C.), refd to. [para. 17].

Fraser Milner Casgrain LLP et al. v. Minister of National Revenue (2002), 223 F.T.R. 23; 2002 D.T.C. 7310 (T.D.), refd to. [para. 17].

Canadian Bank of Commerce v. Canada (Attorney General), [1962] S.C.R. 729; 35 D.L.R.(2d) 49, refd to. [para. 23].

Minister of National Revenue v. Sand Exploration Ltd., [1995] F.C.J. No. 780 (T.D.), refd to. [para. 24].

Pacific Network Services Ltd. et al. v. Minister of National Revenue, [2002] D.T.C. 7585; 226 F.T.R. 100 (T.D.), refd to. [para. 25].

Canadian Forest Products Ltd. et al. v. Minister of National Revenue, [1996] D.T.C. 6506; 119 F.T.R. 152 (T.D.), refd to. [para. 25].

Bisaillon v. Ministre du Revenu national et al. (1999), 264 N.R. 21 (F.C.A.), refd to. [para. 25].

Del Zotto v. Minister of National Revenue, [1997] D.T.C. 5328 (F.C.A.), revd. [1999] D.T.C. 5029 (S.C.C.), refd to. [para. 25].

Paquette v. Minister of National Revenue, [1992] D.T.C. 6394; 55 F.T.R. 152 (T.D.), dist. [para. 36].

Andison v. Minister of National Revenue, [1995] D.T.C. 5058; 90 F.T.R. 74 (T.D.), dist. [para. 36].

Capital Vision Inc. v. Minister of National Revenue (2002), 226 F.T.R. 159 (T.D.), dist. [para. 36].

Bernick v. R., [2002] D.T.C. 7167 (Ont. Sup. Ct.), dist. [para. 36].

R. v. Van Egmond (A.) (2002), 166 B.C.A.C. 264; 271 W.A.C. 264 (C.A.), dist. [para. 36].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 231.2 [para. 7].

Counsel:

William I. Innes and R. Brendan Bissell, for the applicant;

Arnold Bornstein, for the respondent.

Solicitors of Record:

Fraser Milner Casgrain LLP, Toronto, Ontario, for the applicant;

Morris Rosenberg, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This application was heard on March 31, 2004, at Toronto, Ontario, before Snider, J., of the Federal Court, who delivered the following decision on April 16, 2004.