DEMAND FOR CLIENT INFORMATION: CRA’s Abilities
CRA uses third parties to get information about other taxpayers to ensure they are complying with their tax responsibilities. This could include obtaining information from a business about its employees, customers or suppliers, without needing to list their specific names. CRA has recently announced that they intend to continue and increase the use of these information gathering methods. In order to obtain such information without providing specific names, CRA must first obtain the authorization of a judge.
In an April 24, 2019 Federal Court case, CRA applied for judicial authorization to require the taxpayer, a roofing material supplier, to provide information about residential and commercial construction contractors who had an account with them. Specifically, CRA requested:
- the customers’ legal name, business or operating name, contact person, business address, postal code, and all telephone numbers on file;
- the customers’ business numbers, if known;
- the customers’ itemized transaction details including invoice date, invoice number, total sales amount, method of payment, and address of delivery; and
- all bank account information for the customer from credit applications and/or otherwise maintained by the taxpayer.
The information was sought for customers whose total annual purchase and/or billed amount was $20,000 or greater for the period January 1, 2015 to June 30, 2018. For January 1, 2018 to June 30, 2018, information on customers whose total annual purchase and/or billed amount was $10,000 or greater was to be provided.
The Court authorized the CRA to impose the information request on the taxpayer.
ACTION ITEM: CRA has indicated that they will make increased use of this ability to obtain information from one taxpayer about their customers. Consultation should be sought immediately if such a request is received.
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.
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