Can the CRA force a taxpayer to provide information about net worth and the location and identity of assets for the purposes of assessing the “credit risk” of a debt owing pursuant to an assessment when that assessment is under objection and the CRA is otherwise prevented from taking steps to collect the debt? In Raglan Holdings Inc v Canada (National Revenue), 2008 FC 605, the Federal Court held that the CRA can do just that. Subsection 231.1(1) of the Income Tax Act permits the CRA to require taxpayers to produce information provided the requirement is issued for a purpose related to the administration of the Act. The court had no trouble concluding that demanding information for the purposes of aiding collection relates to the administration of the Act. Moreover, the assessment is deemed to be correct unless it is varied on appeal, which means that the taxpayer owes the debt created by the assessment even if it is under appeal. Finally, the court held that seeking information for the purposes of collection is not the same as actually taking steps to collect. The CRA, then, could demand information for collection purposes even when the related assessment was under objection.
