Limits on Accountants’ Duty of Confidentiality

On 18 February 2013 the Minister of national Revenue moved ex parte for an order under section 231.2(3) of the Income Tax Act, authorizing him to impose on KPMG LLP a requirement to provide information relating to certain of its unnamed clients, including their identities, and documentation relating to their participation in an offshore company tax structure.

KPMG moved for an order quashing the ex parte order. It sought a declaration that the sections of the Income Tax Act which authorized the order were of no force or effect because they unjustifiably infringe the protections of life, liberty and security of the person and protections against unreasonable search or seizure contained in the Charter. KPMG also relied on the accountants’ professional duty of confidentiality, including under their code of professional conduct.

After extensive without prejudice settlement discussions, KPMG’s motion was dealt with in writing, and dismissed late last year by the Federal Court of Canada.

The decision confirmed that KPMG’s duty of confidentiality does not prevent the Minister from obtaining the information sought. The Court also declined to exercise its discretion to quash the order on the ground that the section of the Income Tax Act under which the order was made, has since been amended to eliminate the court’s ability to grant such orders on an ex parte  basis.


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