CRA auditors can demand that you answer questions, give access to your books and records, or give documents or information about another taxpayer. (ITA ss. 231.1 and 231.2.) If you refuse to comply with CRA’s demands, it may apply to the Federal Court for an order forcing you to comply. If you ignore that Court order, CRA can ask the Court to find you are in “contempt of court”. The penalty for contempt includes imprisonment. (ITA s. 231.7) So, the Court demands that the CRA prove contempt “beyond a reasonable doubt.”
In this case, the taxpayers seemed to be hiding behind their accountant in failing to give CRA the accounting records it sought. But Justice Harrington didn’t think the evidence was strong enough to prove deliberate contempt of the Court’s order because:
“Although certainly not timely, evidence was provided in this case before the contempt hearing, not at the sentencing stage. Furthermore, on the Minister’s own evidence, there has been an effort to comply, including an offer to meet which was not taken up.” (Para. 35)
So, the Court didn’t hold the taxpayers in contempt yet. But the taxpayers still had to comply with the Court’s order, and, if they did not, the CRA could bring a contempt motion again. (Para. 36)