Canada Revenue Agency (CRA) Went on a ‘Fishing Expedition’ for Offshore Compliance Program (OCP) Review & Rotfleisch & Samulovitch Got the Client ‘Off The Hook’— Completely

Case Overview:

Taxpage has been tax counsel to clients, a married couple, whom we shall call Jack and Jill (names changed due to Solicitor – Client confidentiality) for the past 25 years. As part of our representation of Jack and Jill during all these years, we managed all their interactions with the Canada Revenue Agency (CRA). Please note that regardless of their marital status, Jack and Jill, like all Canadian taxpayers, are taxed individually and file separate tax returns in Canada. 

In spring 2019, Jack and Jill were selected for a tax audit by the CRA’s Offshore Compliance Program. The CRA stated from the outset that this tax audit was to encompass only the years from 2010 through 2017. 

Junior, the son of Jack and Jill, held a Swiss bank account through a trust. Junior and the trust are not Canadian tax residents. Over some years, Jack was a signing officer and potentially a Power of Attorney on the trust account. 

The Problems & Our Approach:

1st Issue:  CRA’s ‘Fishing Expedition’ and Taxpage’s tactics to stop it 

In 2021, during the audit, Taxpage convened a conference tax audit interview with the CRA tax Auditor and her Team Leader. The attendees were  (1) Mr. David Rotfleisch, Certified Tax Law Specialist and Chartered Professional Accountant (CPA) and Principal of Taxpage: (2) supporting tax lawyers, (3) the taxpayers being audited, and (4) officials from CRA. 

During this meeting, the CRA Tax Auditor informally requested if there were any additional bank accounts held by Jack or Jill in the period from 2018 to present [2021]. Jill stated that she had an account briefly in 2019 at “Swiss Bank”. At the conclusion of the conference call, all participants, including Taxpage lawyers, agreed to forward, on an informal and voluntary basis (since the years being discussed were outside of the tax audit period) to the CRA on behalf of Jill, the statements from those accounts, which had already been closed. During the tax audit period as such, and up to the date of opening of Jill’s Swiss Bank account neither Jack nor Jill held any accounts at Swiss Bank. 

As part of the tax audit, which became a fishing expedition at this point, the CRA sent a request to the Swiss Federal Tax Authority (Swiss FTA) requesting information and documents on any account held at the Swiss Bank for which Jack and Jill had a “Power of Attorney”. 

Further, the CRA had made no such similar request related to powers of attorney to either Jack or Jill directly. This request from CRA did not name any specific 3rd parties. Moreover, this request by CRA to Swiss FTA was kept a secret from both Taxpage and Jack and Jill themselves. Taxpage was informed about CRA’s request to Swiss FTA  via our trusted sources.

2nd Issue: CRA requested information that was improper and unlawful

During the tax audit or at any other time, the CRA has never requested from Taxpage any information related to any bank accounts or other property over which Jack and Jill have no beneficial interest, but merely a Power of Attorney or signatory power.

Had the CRA made such a request to us, we would have formally denied it, as in the opinion of Taxpage lawyers, it is clear from a Canadian income tax law perspective that such a request is improper and unlawful. 

In fact, the Canadian tax lawyers at Taxpage had never seen such a request from CRA during their 40 years of practice. 

Under  Canadian tax law, a taxpayer is only required to report income and existence of any foreign property in accordance with the rules for reporting Specified Foreign Property (a defined term under the Canadian Income Tax Act) if the taxpayer is the beneficial owner of the same, regardless in which jurisdiction the property is situated. The 3rd party accounts on which a taxpayer merely holds a power of attorney or signatory power are taxwise irrelevant, and the respective bank information is thus not to be included in tax audit of the taxpayer. 

As soon as Taxpage got to know that the request has been made by the CRA behind their backs to Swiss FTA, Taxpage immediately drafted a detailed letter to the Swiss Bank and informed them that any requests made to any party in relation to property in which Jack and Jill have no beneficial interest is improper and should be ignored or explicitly denied. In the letter, we further reiterated that no such request was made by the CRA to Jack and Jill directly. 

In addition to notifying Swiss Bank about the rights of our clients, we also teamed up with a premier Swiss Law Firm expert in Swiss Tax Law in order to protect the interests of our clients. Taxpage provided the Swiss tax lawyers our Canadian legal analysis regarding the validity of the Request for Information (RFI) made by CRA to Swiss FTA. 

Further, we at Taxpage informed the Swiss tax lawyers that if Swiss FTA proposes to release information about our clients Jack and Jill to CRA, Swiss tax lawyers would make a strong request to Swiss FTA to put the process on hold, pending resolution of an application (Writ of Mandamus) in the Federal Court of Canada to quash the entirety of the request on the basis of the patently false information set out therein. 

Finally, the Swiss FTA, after the intervention of the Swiss tax law firm acting at the behest of Taxpage, refused to provide information about our clients Jack and Jill to CRA without Taxpage having to file the application to the Federal Court of Canada.

 3rd Issue: CRA’S Offshore Compliance Program  (OCP) kept the audit going for another 4 years

A reasonable person would think that 3 years would be more than enough time for Canada Revenue Agency to finish the audit. Various employees of the CRA working on the tax audit kept going on leaves of absence of more than 1 year, or retiring, while the file kept getting tossed from one auditor and team leader to another auditor and team leader. 

Every time the CRA made a genuine request for more information and documents during the audit, we at Taxpage successfully provided the requested information and documents immediately in order to bring the audit to an end, but with every passing auditor, the CRA kept taking more and more time to respond to our emails and phone calls. 

At this point, Taxpage and its clients, Jack and Jill, were unfortunately trapped in the bureaucracy. There is nothing that can be done to speed an audit along. Complaints and court applications will not achieve anything; , so we were going to waiting for this audit to end. But there was still one thing we could do. 

Tax lawyers at Taxpage continued to follow up with the CRA to keep the pressure on them: 

1. we diarized follow-ups for the next few months; 
2. made phone calls from different phone lines because the CRA auditor stopped picking up our calls made from our usual phone lines; 
3. made irregular calls at odd times to catch the auditor off-guard. 

The Result

Finally, in spring 2026, after 7 years, Taxpage received an audit completion letter from the CRA informing us that there was no problem in the tax filings of our clients. Because CRA’s ‘fishing expedition’ went nowhere, they decided to ‘cut bait.’ The Canadian tax lawyers at Taxpage got our clients, Jack and Jill, ‘off the hook’ completely. 

Lessons Learned:

First, the CRA can and does chose Canadian Taxpayers for audit randomly. Therefore, Taxpage advises Canadian taxpayers to be very careful in filing their taxes; keep all bank records including in particular offshore bank accounts, sales records, receipts, invoices, and any other important paperwork in your possession for 10 years. It is better to get expert tax advice in the beginning when filing taxes so that in case the CRA audits you, your paperwork is complete.  . 

Second, CRA records every conversation during the tax audit, and the first conversation is the most important. A lot of Canadian taxpayers initiate the conversation with CRA officials and end up divulging potentially incriminating information and reach out to tax lawyers when it is too late. The best move is to always let an expert Canadian tax lawyer handle all communication with CRA officers from the beginning. 

Third, the CRA can intrude on constitutional rights of Canadian taxpayers and has done so in the past. It is very important that Canadian tax lawyers are brought in to prevent the CRA from exceeding their executive authority. 

Disclaimer: This case study provides information of a general nature only. It is only current at the posting date. It is not updated, and it may no longer be current. It does not provide legal advice, nor can it be relied on. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions, you should consult an experienced Canadian Tax Lawyer.