Access to Information Act

The applicants, who were awarded damages in Ludmer regarding CRA’s conduct of its audit of their investments in an off-shore company and who had been denied full access to 8,041 out of 38,090 pages of documents that had been identified as covered by their requests under s. 6 of the Access to Information Act (“ATIA”), sought judicial review under s. 41 of the ATIA of CRA’s decision to exempt various of such documents from disclosure.

In the course of dismissing the application of the applicants, Bell J addressed the exemptions claimed for correspondence or documents obtained by the Canadian competent authority under the Tax Information Exchange Agreement with Bermuda and the Income Tax Conventions with Ireland, the Netherlands and the U.S. The applicants contended, in the case of the TIEA, that such communications should have been disclosed unless it had been determined both that they had been communicated in confidence and that they transmitted information pursuant to the TIEA. In rejecting this submission, Bell J stated (at para. 98):

Article 4 of the TIEA defines “information” as follows: information means any fact, statement or record in any form whatever. Article 8 of the TIEA states that any information received by a party under this agreement shall be treated as confidential, and may only be disclosed under certain circumstances. I am of the view the ATIA and the TIEA purposely used broad language when referring to information obtained from a foreign government. I agree with the Respondent that any information obtained by the CRA pursuant to the TIEA is to be treated as confidential. In my view the Respondent correctly identified the exemption set out in paragraph 13(1)(a) of the ATIA and reasonably exercised its discretion pursuant to s. 13(2).

The applicants, who were awarded damages in Ludmer regarding CRA’s conduct of its audit of their investments in an off-shore company and who had been denied full access to 8,041 out of 38,090 pages of documents that had been identified as covered by their requests under s. 6 of the Access to Information Act (“ATIA”), sought judicial review under s. 41 of the ATIA of CRA’s decision to exempt various of such documents from disclosure.

In rejecting the applicants’ submission that CRA’s reliance upon s. 16(1)(b) “to exempt virtually all records flowing from an audit is contrary to the wording, spirit and intent of the ATIA,” Bell J.stated (at para. 102):

[T[he term “investigation”, in these circumstances, includes tax audits. … Furthermore, in this case the exempt information consists of either audit techniques used by the CRA to identify or guide its auditors in applying s. 94.1 … or a risk assessment tool used to evaluate and manage the risks of an ongoing audit. Such information falls within the two (2) categories identified at s. 16(1)(b). .. [T]he Respondent reasonably exercised its discretion not to disclose the information. The negative consequences of disclosure outweigh the public interest in disclosing the information.

The applicants sought judicial review under s. 41 of the Access to Information Act (“ATIA”), of CRA’s decision to exempt various documents from disclosure under the ATIA. In the course of dismissing the application of the applicants, and regarding the scope of the exclusions in ss. 21(1)(a) and (b), Bell J stated (at para. 113):

Section 21 of the ATIA is a discretionary class exemption aimed at maintaining confidentially in the decision-making process of a government institution. In Canadian Council of Christian Charities v. Canada (Minister of Finance), [1999] 4 FC 245 at para. 30, 168 F.T.R. 49 [Canadian Council], the Court acknowledges the “importance of governmental openness as a safeguard against the abuse of power, and a necessary condition for democratic accountability”. However, it notes that it is “equally clear that governments must be allowed a measure of confidentiality in the policy-making process”. The Court, in Canadian Council, goes on at paragraph 39 to state “[…] most internal documents that analyse a problem, starting with an initial identification of a problem, then canvassing a range of solutions, and ending with specific recommendations for change, are likely to be caught within paragraph (a) or (b) of subsection 21(1)”. In my opinion, the Respondent reasonably exercised its discretion not to disclose the records.