Copyright 1996
InterAm Database
National Law Center for Inter-American Free Trade


March 10, 1993

The Federal Court of Appeal has decided a case under the information 
exchange article of the Canada - U.S.A. tax treaty. In Montreal Aluminium 
Ltd. v. Canada ((1992) 2 CTC 356, 92 DTC 6567 (FCA)), after the taxpayer 
did not respond to an informal request by Revenue Canada for information 
relating to the taxpayer's business, pursuant to the Income Tax Act the Minister 
of National Revenue issued a formal requirement that certain information be 
divulged. The corporation moved to have the Minister's requirement set aside, 
claiming that (i) the requirement was issued following a request by the United 
States pursuant to Art. 27 of the Canada - U.S.A. treaty and (ii) the requested 
information contravened the treaty because it was sought for purposes of a 
grand jury investigation in the U.S.A. and not for tax purposes. After the trial 
court dismissed the taxpayer's motion, the matter was brought before the 
Federal Court of Appeal. At the appellate level, the Minister admitted that the 
wording in the requirement that indicated that it had been issued "for purposes 
related to the administration or enforcement of the Income Tax Act" was 
incorrect. (This admission was not made at the trial level.) The appellate court 
noted that if the requirement contains a false or misleading statement of 
purpose, the requirement might be invalid. Consequently, the taxpayer's appeal 
was allowed and the case must now be heard by the trial court on the merits.