Income Tax Act did not allow for CRA to conduct random fishing expedition

Canada Revenue Agency(CRA) sought information regarding clients of Hydro-Québec with commercial accounts. Hydro-Québec was corporation that supplied electric power to individuals and corporations in province of Quebec. CRA brought formal demand for which judicial authorization was required under s. 231.2(1) of Income Tax Act (Act) for production of information regarding Hydro-Québec commercial account-holders. Application dismissed. To grant judicial authorization would have been contrary to principles of respect for privacy. CRA did not know how many commercial accounts existed with Hydro-Québec, and could not determine how many of commercial accounts were associated with individuals or corporations. CRA could not name targeted identifiable group. CRA was not looking for information directly connected with fiscal situation of group of taxpayers. Act did not allow for CRA to conduct random fishing expedition to determine whether taxpayers were filing accurate returns. Privacy interests of commercial account-holders were paramount. In circumstances, CRA would not be conducting income tax verification in good faith. Just because formal demand came from CRA did not mean that there was valid income tax verification being conducted, as this was circular logic that would render s.231.2(1) of Act devoid of meaning. All persons who had commercial account with Hydro-Quebec was not identifiable group.

Canada (Revenu national) c. Hydro-Québec (2018), 2018 CarswellNat 3538, 2018 CarswellNat 4138, 2018 FC 622, 2018 CF 622, Yvan Roy J. (F.C.).