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Gaudreau: Tax Planning Documents Are Discoverable (Subject to Privilege)

In the recent decision of Gaudreau v. R.[1], the Tax Court of Canada ordered a taxpayer to disclose a tax memorandum prepared by an accounting firm. This decision serves as an important reminder that tax advice received from accountants is not protected by privilege.[2] This case is also a reminder of the importance of attorney-client privilege in a transactional context.

Gaudreau concerns a tax memorandum prepared by the taxpayer’s accountants structuring a transaction as a “hybrid sale”. The CRA assessed the taxpayer on the basis that this transaction was subject to the specific anti-avoidance rule found in subsection 84(2) of the Income Tax Act.[3]

The appellant opposed the disclosure of the memorandum as part of the discovery process, arguing the lack of relevance to the issue under appeal because the memorandum contained no mention of subsection 84(2) of the ITA.

The Court rejected the appellant’s position and ordered the disclosure of the memorandum, highlighting the broad interpretation of the relevance criterion applicable to evidence in the pre-trial examination context.

On the basis of such a broad interpretation of the relevance criterion, attorney-client privilege represents a rare exception to the disclosure rules, provided this privilege has not otherwise been waived via disclosure to third parties.

In a transactional context, where privileged documents, such as tax opinions and memoranda prepared by attorneys, may be shared between the seller and the buyer, whether directly or via respective counsel, the privilege relating to such documents can be preserved based on the common interest of the parties in the conclusion of the transaction.[4]

However, such privilege can be easily (and often inadvertently) waived by sharing such privileged documents with other advisors, such as accountants or bankers, implicated in the transaction on either side.

The importance of establishing strict protocols between the parties in respect of the exchange of privileged documents, including tax advice, cannot be overstated. Any concerns should always be brought to legal counsel’s attention if there is any doubt regarding the potential waiver of privilege with respect to protected documents.


[1] 2023 TCC 115 ("Gaudreau”).

[2] Gaudreau, para. 59, referring to Tower v. MNR, 2003 FCA 307.

[3] R.C.S. (1985), c. 1 (5th supp.) ("ITA"). See also, for example, the recent decision of Foix v. R., 2023 FCA 38, leave for appeal filed with the Supreme Court of Canada on May 2, 2023.

[4] See Iggillis Holdings Inc. v. MNR, 2018 FCA 51, leave for appeal denied by the Supreme Court of Canada in MNR v. Iggillis Holdings Inc., 2018 CarswellNat 5994; Pitney Bowes of Canada Ltd. v. R., 2003 FCT 214; Fraser Milner Casgrain LLP v. MNR, 2002 BCSC 1344.

tax Tax Court of Canada CRA Income Tax Act



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