A “tax warrant” is essentially the same thing as a search warrant. The CRA will obtain a warrant when they have reasonable grounds to suspect that a tax-related offence has occurred. Such a warrant allows for the CRA to enter a taxpayer’s premises to search for anything that could lead to the commission of an offence. It grants the CRA the power to seize potential evidence, such as computers, documents, or hard drives. These tax warrants are only granted for criminal proceedings rather than civil proceedings. This is because when a criminal investigation is launched, certain protections granted by the Canadian Charter of Rights and Freedoms are engaged, which provide every Canadian with certain rights, such as the right to be secure against unreasonable search and seizure.
s. 231.3 of the ITA governs the rules around the CRA’s ability to execute a warrant. A judge may, on an ex parte application (one which does not require notice), issue a warrant to allow the CRA to search any place that may provide evidence as to the commission of an offence. In order for a judge to issue a warrant, they must first have reasonable grounds to believe an offence was committed.
How to respond to a CRA tax warrant.
Being on the receiving end of a CRA issued search warrant can be very stressful. It is important to know how to respond if you ever find yourself in this position.
Firstly, seek out and obtain legal counsel. Taxpayers should always hire legal counsel when a search warrant has been issued against them. S. 231.4(6) of the ITA provides the right to be represented by counsel to any taxpayer whose affairs are being investigated during the course of a search warrant. It is important to note that the authority in charge of executing the search warrant does not have to wait for counsel to be present and can execute the warrant immediately. If counsel is not present, politely ask the investigators in charge to delay the execution of a warrant until your counsel arrives.
The second thing you should do is review the warrant upon first being presented with it. This allows the taxpayer to ensure there aren’t any errors or defects that exist. If an error does exist, it should be brought to the attention of the investigator in charge immediately.
Finally, cooperate with the investigation. It is important for the taxpayer to cooperate because failure to do so could lead to serious legal issues separate from the alleged tax offence in question. Cooperation includes taking any steps to ensure that the taxpayer does not interfere with, impede or obstruct any part of the investigation.