Solicitor Client Privilege In Tax Matters

In a prior blog post, I said that solicitor client privilege remains strong in Canada. A recent judgment of the Federal Court included two throwaway comments, so easily quotable, that appear to suggest that solicitor client privilege does not extend to "tax planning" advice.

In Canada v. Revcon Oilfield Constructors Incorporated, 2015 FC 524, the Federal Court offered the following two gems that the government will be sure to cite when they want to seek tax planning documents from a taxpayer:

"Tax planning communications are not privileged"; and "Advice given by an accountant (or, I would add, by a lawyer for accounting or tax planning purposes) does not fall within the scope of solicitor-client privilege: Canada (National Revenue) v Grant Thornton, 2012 FC 1313 at para 22". Most tax lawyers divide tax files into one of two categories: litigation or planning. To someone used to thinking in those categories, the comments from the Federal Court above would seem to suggest that the latter does not attract solicitor client privilege. However, that is not a correct statement of the law. Generally, a tax lawyer's communications with his clients in furtherance of providing legal advice for tax planning attract solicitor client privilege. In fact, that is exactly what the Federal Court determined in Revcon - the Court...