Can Your Accountant Keep A Secret? Is S/he Allowed To?
Our accountants know a great deal more about us than most of us would want known publically. For the most part, we trust that this information will be kept private including from the tax authorities unless we release it. However, a 2016 decision by the Federal Court makes it clear that your accountant may be required to disclose confidential information about his or her clients, to the Minister of National Revenue.
The case was the result of the Minister of National Revenue moving ex parte (without notice) for a court order requiring KPMG to disclose confidential information relating to certain unnamed clients, including their identities, and documentation relating to their participation in a offshore tax structure. The fact that the motion was made deprived KMPG or their clients from making submissions to the court about why the order should not be granted or should be granted on specified terms. The court granted the order under section 231.2(3) of the Income Tax Act, that KPMG disclose the confidential information.
KPMG moved to quash or cancel the order arguing that under the Chartered Accountants of Ontario Rules of Professional Conduct, they were prohibited from disclosing confidential information. KPMG further argued that the Income Tax Act allowance to bring such a motion on an ex parte basis, infringed on protections against unreasonable search and seizure contained in the Charter of Rights and Freedoms.
The Federal Court rejected these arguments and ruled that KPMG was required to disclose the information. In doing so it relied heavily on the fact that the Code of Professional Conduct allows disclosure with the client's consent or if required by lawful authority. The court added that if there were any concerns about further confidentiality, such as solicitor-client confidentiality those concerns could be raised by the accountant at the time of disclosure.
The Lesson: Even if your accountant is able to keep a secret, s/he may not be allowed to if a court orders them to disclose the information. This case makes it clear that such orders can be sought without notice.
Canada (National Revenue) v KPMG LLP, 2016 FC 1322 (F.C.) https://www.canlii.org/en/ca/fct/doc/2016/2016fc1322/2016fc1322.pdf
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