By Stevan Novoselac, Aliana Dhanani

In Canada (National Revenue) v Hydro-Québec (2018 FC 62) (“Hydro-Québec”), the Federal Court (“FC”) restricted the Canada Revenue Agency’s (“CRA”) authority to force businesses to provide information about their customers pursuant to section 231.2 of the Income Tax Act (“Act”). In rejecting the CRA’s request for permission to obtain the information, the FC held that the CRA betrayed a lack of consideration for taxpayer privacy, with an insufficient connection to determining compliance.

The CRA sought to gather information and documents on Hydro-Québec’s 4.3 million “business customers”, with the exception of “large-power” customers, such as mining companies, processing plants and government agencies, as well as customers paying residential rates for household use. The CRA wanted a list of customers paying a business rate, presumably to find out who was carrying on a business, but not reporting income. Despite the puzzling absence of any objection from Hydro-Québec to comply with the CRA’s broad request, the FC expressed the need to protect the interests of the unrepresented targeted group and refused to grant the CRA authorization to compel Hydro-Québec to release personal information about their business customers.