Tax & Trade Blog

The Supreme Court of Canada rendered its first decision on the Customs Tariff in Canada v.Igloo Vikski Inc. (2016 SCC 38).  The decision provides guidance on applying the General Rules for the Interpretation of the Harmonized System (“General Rules”), particularly in the context of how the General Rules inform one another.

Two recent decisions advance the law of privilege. Lizotte v Aviva Insurance Company of Canada (2016 SCC 52) and MNR v Iggillis Holdings Inc. (2016 FC 1352) respectively clarify the difference between solicitor client privilege (SCP) and litigation privilege (LP), and also establish that so-called advisory common interest privilege (CIP) - privilege that protects transactional negotiations between parties with separate legal representation - does not exist in Canada. The two decisions are reminders of the scope of privilege in the tax context, and also highlight the importance of understanding the proper ambit of privilege when engaging in tax transactions or tax litigation.

In Fairmont Hotels Inc. (2016 SCC 56) and Jean Coutu Group (2016 SCC 55) the Supreme Court of Canada (the “SCC”) clarified the law of rectification.  The result might be disappointing for taxpayers and tax practitioners alike, yet the decisions bring Ontario back in line with the rest of Canada by establishing that an application for rectification refer to a detailed intention. 

 The principle of solicitor-client privilege holds that communications between a client and his or her lawyer cannot be compelled to be disclosed without permission of the client.  Although this principle started as an evidentiary rule, it has developed into a principle of fundamental justice. 

Canadian tax legislation endows the CRA with various powers to compel individuals and businesses to disclose information and documentation in support of administering or enforcing that tax legislation.  Failure to comply with CRA’s requirements undert these rules can result in fines or imprisonment.  Solicitor-client privilege and these disclosure rules collide where CRA attempts to compel client-related information and documentation from lawyers.  The Supreme Court of Canada has recently dealt with this issue in Chambre des notaires du Québec (2016 SCC 20) and its companion case Thompson (2016 SCC 21).  The decisions make clear that solicitor-client privilege will be upheld in the face of these disclosure provisions.