Budget 2021: CRA To Be Granted The Authority To Compel Oral Responses

• Published date: 25 June 2021
• Subject Matter: Accounting and Audit, Tax, Audit, Income Tax, Tax Authorities
• Law Firm: McMillan LLP
• Author: Mr Michael Friedman

Originally published April 23, 2021

Budget 2021 proposes to grant the Canada Revenue Agency (the "CRA") the authority to demand oral responses in the course of an audit. The proposed measure will apply to audits undertaken under a number of statutes, including the Income Tax Act (the "Tax Act"), the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and Part 1 of the Greenhouse Gas Pollution Pricing Act, and is being introduced in response to the judgment rendered by the Federal Court of Appeal in Canada (National Revenue) v. Cameco Corporation¹.

Under the Tax Act, the CRA has the authority to audit taxpayers and otherwise ensure compliance with the statute. Paragraphs 231.1(1)(c) and (d) of the Tax Act currently provide that a CRA official may, at any reasonable time, for any purpose related to the administration or enforcement of the Tax Act:

• enter any premises where a business is carried on, any property is kept, anything is done in connection with a business or any books or records are or should be kept, and
• require the owner or manager of the property or business and any other person at the premises to give the CRA official all reasonable assistance and answer all proper questions relating to the administration or enforcement of the Tax Act and, for this purpose, require the owner or manager to attend at the premises with the CRA official.

Budget 2021 proposes statutory amendments that will expand the audit authority of CRA officials and will specifically authorize a CRA official to require the owner, manager or any other person on the premises of a taxpayer to answer all proper questions orally or in...