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Taxpayers Must Produce Information That Should Have Been Included in Books and Records

On October 31, 2022, the Federal Court of Appeal (“FCA”) rendered its decision in Miller v. Canada (National Revenue).[1]

Under appeal was a compliance order issued by the Federal Court pursuant to section 231.7 of the Income Tax Act (“Act”), which ordered the taxpayer to provide and seek information from his accountants, his solicitors, and his bank in Luxembourg. The FCA dismissed the appeal.

Central to this appeal is the ambit of the FCA’s previous ruling in Canada (National Revenue) v. Cameco Corporation, in which it concluded that the Minister of National Revenue’s (“Minister”) audit power does not permit to compel oral interviews.[2] In that matter, the Minister had requested 25 employees to attend interviews and answer oral questions, following a lengthy audit process during which Cameco had already provided extensive information to the Minister.


Sections 230 to 232 of the Act set out the authority of the Minister to conduct audits. If a person fails to comply with a requirement issued under section 231.1 or 231.2 of the Act, the Minister can make a summary application for a compliance order.

Mr. Miller had done consulting work for companies looking to access the Canadian public markets. As part of an ongoing audit of his 2007 to 2016 taxation years, the Minister had issued a series of requests under section 231.1. These requests required Mr. Miller to provide certain documents, records and information.

Lower Court’s Decision

The Federal Court rejected the taxpayer’s argument that Cameco establishes that subsection 231.1(1) pertains to what is in a taxpayer’s books and records, as opposed to what should be there. The Federal Court agreed with the Minister’s interpretation, holding that if certain information should be in a taxpayer’s books and records, the Minister must be able to gain access to that information under subsection 231.1(1).

The Federal Court distinguished the facts in this case from those in Cameco. While in this case, Mr. Miller failed to provide information and documents that should have been included in his books and records, there was no suggestion in Cameco that the information sought by the Minister by way of oral interview should have been set out in Cameco’s books and records.

The Federal Court of Appeal Decision

Justice Gleason emphasized that the statements made in Cameco must be understood in its context and are limited to the issue before the Court in that case.[3] In her view, Cameco only held that the Minister cannot compel oral interviews under paragraph 231.1(1)(a).[4]

Justice Gleason further determined that the Federal Court did not err in its interpretation of section 231.1. She found that the Supreme Court’s decision in Redeemer Foundation v. Canada (National Revenue),[5] supports the interpretation that what may be includes information that is or should be in the taxpayer’s books and records.[6]

This decision shows that the factual context of the audit plays an important role in the determination of an application under section 231.7. Justice Woods’ concurring reasons in Cameco also support this proposition, as she paid particular attention to the factual circumstances which were relevant to the exercise of the Federal Court’s discretion.

Extended Audit Powers

In light of Miller, Cameco stands out as an outlier, which reminds us that the Minister cannot be abusive in its audit requests. Recent legislative amendments to section 231.1 clarify how broad the Minister’s powers are intended to be. In particular, the added subparagraphs 231.1(1)(d)(i) and (ii) now clearly provide authority to request that taxpayers answer questions orally or in writing.

[1]2022 FCA 183 (“Miller”).

[2]2019 FCA 67 (“Cameco”).

[3]Miller, at para. 36.

[4]Miller, at para. 37.

[5]2008 SCC 46.

[6] See also Friedman v. Canada (National Revenue), 2021 FCA 101, a case in which the FCA upheld a compliance order requiring written answers to a CRA questionnaire seeking information similar to that sought from the appellant in this case.

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