Accountant-Client privilege

ACCOUNTANT-CLIENT PRIVILEGE UNDER THE INCOME TAX ACT

Per se, in a contest with the Canada Revenue Agency (CRA) over seized client documents, accountant-client privilege does not exist. However, in such a situation, solicitor-client privilege often does extend to them. Whenever lawyer-client privilege attaches to documents in the possession of an accountant, failure by the accountant to claim this privilege may be a breach of duty owed to the client and could leave the accountant open to a claim for damages.

The provisions of the Income Tax Act entitles the CRA to demand production of documents. Such demands are often made of accountants and others, such as financial advisers, bankers, planners, etc., advising on business transactions, particularly if the effect of the transaction is a large reduction of taxes. Often such seizures are made incases where there is some evidence of tax evasion or an aggressive plan to avoid tax. But even in an ordinary audit, tax officials often find useful ammunition in the hands of advisers. Typically, the taxman collects information by appearing simultaneously at the offices of the accountant, the advisers and the client and serving demands for the production of all relevant documents.

If this occurs the accountant must consider carefully both the obligation to comply under the Tax Code and the obligation to the client to protect confidential communications and any privileged information.

While the CRA has broad investigatory and seizure powers, lawyers’ records usually are protected by solicitor-client privilege. This means the right to refuse to disclose oral or documentary communication on the ground that the communication is one passing between a client and his/her lawyer in professional confidence.

The law provides that no CRA official may examine or seize a document in the possession of a lawyer without giving him/her a reasonable opportunity of making a claim of privilege. If the lawyer claims that the client has solicitor-client privilege in respect of that document, the tax officer must place the document in a sealed package without examining or making copies of it and deliver it to the local Sheriff or to a mutually acceptable custodian.

The general common law rule of lawyer-client privilege is that communications passing between a client and his/herlawyer are privileged and cannot be voluntarily given, nor compelled by a court of law to be given, in evidence without the consent of the client if the communication was to enable the lawyer to give legal advice.

It should be noted that the privilege belongs to the client and may be waived only by him/her.

While accountant-client privilege has generally not been allowed by the courts, the doctrine of solicitor-client privilege has been expanded to include cases where the accountant is acting as an agent on behalf of the client and certain documents prepared by the accountant are in the hands of the lawyer.

Take A Cautious Approach

Accountants should take a cautious approach in providing client information to the CRA to avoid unauthorized production of confidential and privileged documents of their clients. They should consider it advisable not to retain those that may be the subject of solicitor-client privilege and instead have them held by the lawyer.

Usually there is a demand by the CRA to produce the documents without delay. Despite this, accountants are permitted to take the time to contact the client’s lawyer to seek advice on determining which are privileged and which are not.

The subject of privilege and confidentiality of client documents in the hands of an accountant is difficult and must be handled with extreme caution.

© DioGuardi Law

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Tax Law

​If you are one of thousands of Canadians who have failed to file taxes for several years the answer maybe to seek amnesty. Be aware that failure to file for more than one year if you owe taxes is a criminal offence and you may be criminally prosecuted.

The CRA Voluntary Disclosure Program allows taxpayers to come forward and obtain immunity from prosecution and most civil penalties, provided certain conditions are met.

We specialize in lawyer-negotiated tax debt settlements and tax amnesties with federal and provincial tax authorities, offering taxpayers a much-needed resource for the resolution of situations that all too often put personal and financial lives at risk. We stand as your protector, defender, and advocate to ensure that you the taxpayer, receive the best treatment possible. 

We offer solutions for tax problems such as:

  • Unreported income
  • Unfiled tax returns
  • Payment arrangements
  • Unpayable tax debt
  • Tax dispute litigation
  • Criminal tax defense

Wills, Estates & Trusts

​We offer the following will, estate and trust services for individuals and business-owners:

  • Wills
  • Preparation of trust agreements
  • Powers of attorney
  • Estate administration
  • Probate
  • Representation in estate driven litigation
  • We currently offer a special time limited package for one will and two powers of attorney (property and personal care) for $295 plus HST

Real Estate

We can assist you with all your real estate needs including:

  • Drafting agreements
  • Purchases and Sales
  • Title transfers
  • Leases

Tax Debt Relief

With the coronavirus pandemic leaving many in a precarious and dire financial situation, it is essential that you protect yourself financially. If you have a large, unpayable tax bill, we can help. We act in the best interest of the tax debtor. Unlike us, insolvency trustees represent not only you but your creditors (ie- the tax collector). The more tax you pay, the more trustees earn. Our goal through leveraged negotiations, is to reduce your tax debt.

Please consult our blog post Protecting Your Assets from Creditors for more information.

Business & Tax Planning

If you do not already have a certified financial planner, we can provide one or more highly qualified people who can work closely with us to assist you with such matters as:

  • Resident and non-resident corporate restructuring
  • Optimum use of holding corporations
  • Continuity and succession planning
  • Tax-free transfers
  • Losses and ABIL planning
  • Making interest tax deductible
  • Small business planning

Corporate & Commercial Law

We have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:

  • Incorporations and corporate governance
  • Corporate reorganizations and transactions for the directors and shareholders
  • Negotiation and drafting of agreements, professional corporations, minute book maintenance

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Joyce Bruno

EXECUTIVE LEGAL ASSISTANT

Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.

Paul DioGuardi

B.A., LL.B, Queen’s Counsel

Paul obtained his Law Degree from Queen’s University in 1964.  He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy