Minister of National Revenue v. Lee, 2016 FCA 53

• Judge: Dawson, Near and Boivin, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 16, 2016
• Jurisdiction: Canada (Federal)
• Citations: 2016 FCA 53;(2016), 481 N.R. 100 (FCA)

MNR v. Lee (2016), 481 N.R. 100 (FCA)

MLB headnote and full text

Temp. Cite: [2016] N.R. TBEd. MR.011

Minister of National Revenue (appellant) v. John T. Lee (respondent)

(A-278-15; 2016 FCA 53)

Indexed As: Minister of National Revenue v. Lee

Federal Court of Appeal

Dawson, Near and Boivin, JJ.A.

February 16, 2016.

Summary:

The Minister of National Revenue applied for a compliance order under s. 231.7(1) of the Income Tax Act pursuant to a June 1, 2012 request for information (Requirement) to Mr. John T. Lee under s. 231.2(1) of the Act. The Requirement was issued to Lee to: (a) take collection action against Lee respecting his outstanding personal income tax debt; (b) determine whether Lee had sufficient personal assets to justify raising derivative assessments against him, as director, under s. 227.1 of the Act and s. 323 of the Excise Tax Act (ETA) respecting the corporations' outstanding debts under s. 153 of the Act and s. 228 of the ETA, respectively; and (c) determine whether it might be appropriate to reassess Lee under s. 160 of the Act or s. 325 of the ETA respecting the transfer of property to him by a person with whom he did not deal at arm's length for consideration that was less than the property's fair market value at a time when the transferor was indebted to the Minister under either the Act or the ETA; and (d) further the audits of Lee's 2005 to 2011 taxation years, inclusive, and, if as a result of those audits, Lee was reassessed, use the information and documents to be obtained to determine his ability to pay the tax assessed, as well as to take possible collection actions.

The Federal Court, in a decision reported at (2015), 481 F.T.R. 71, dismissed the application. The Minister appealed.

The Federal Court of Appeal allowed the appeal.

Income Tax - Topic 9253

Enforcement - Production of information - Information which must be produced - [See Income Tax - Topic 9255 ].

Income Tax - Topic 9255

Enforcement - Production of information - Demand of information - General - The Minister of National Revenue applied for a compliance order under s. 231.7(1) of the Income Tax Act pursuant to a June 1, 2012 request for information (Requirement) to Mr. John T. Lee under s. 231.2(1) of the Act - The Requirement was issued to Lee to: (a) take collection action against Lee respecting his outstanding personal income tax debt; (b) determine whether Lee had sufficient personal assets to justify raising derivative assessments against him, as director, under s. 227.1 of the Act and s. 323 of the Excise Tax Act (ETA) respecting the corporations' outstanding debts under s. 153 of the Act and s. 228 of the ETA, respectively; and (c) determine whether it might be appropriate to reassess Lee under s. 160 of the Act or s. 325 of the ETA respecting the transfer of property to him by a person with whom he did not deal at arm's length for consideration that was less than the property's fair market value at a time when the transferor was indebted to the Minister under either the Act or the ETA; and (d) further the audits of Lee's 2005 to 2011 taxation years, inclusive, and, if as a result of those audits, Lee was reassessed, use the information and documents to be obtained to determine his ability to pay the tax assessed, as well as to take possible collection actions - A Federal Court judge dismissed the application - The Federal Court of Appeal allowed the Minister's appeal - The judge declined to grant the requested order because: i) the Requirement was "overly expansive in breadth and in depth"; ii) the intended recipient of the Requirement was unclear; the Requirement failed to clearly identify the recipient "both in name and role"; and iii) in the judge's view, "a requirement directed at a director or officer of the company that concerns business assets to be a requirement directed at the corporate entity itself" - The fact the Requirement required disclosure of assets owned beneficially by Lee made the Requirement neither overbroad nor ambiguous - Further, the Requirement's scope or breadth was a matter for the Minister, so long as the information requested was required for any purpose related to the administration or enforcement of the Act - Moreover, it was not improper for a Requirement to require information to be provided about a third party.

Cases Noticed:

Taxpro Professional Corp. et al. v. Minister of National Revenue (2011), 385 F.T.R. 103; 2011 FC 224, affd. (2011), 427 N.R. 354; 2011 FCA 306, refd to. [para. 8].

Minister of National Revenue v. SML Operations (Canada) Ltd., [2003] F.T.R. Uned. 459; [2003] 4 C.T.C. 201; 2003 FC 868, dist. [para. 9].

Minister of National Revenue v. Chamandy (2014), 452 F.T.R. 26; 2014 FC 354, dist. [para. 9].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 231.2 [para. 5]; sect. 231.7(1) [para. 6].

Counsel:

Margaret Nott and Christopher Bartlett, for the appellant;

No one appeared for the respondent.

Solicitors of Record:

William F. Pentney, Deputy Attorney General of Canada, Ottawa, Ontario, for the appellant.

This appeal was heard at Toronto, Ontario, by Dawson, Near and Boivin, JJ.A., of the Federal Court of Appeal, on February 16, 2016. On the same date, Dawson, J.A., delivered the following decision orally for the court from the bench.