Case information

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Taxation - Income tax - Collection - Garnishment - Minister of National Revenue issuing requirements to pay to appellant financial institution with respect to lawyer’s tax liability - Whether the courts below erred in finding that the act of delivering the cheques for deposit into the joint account rendered the bank liable to make a payment to the tax debtor such that the funds were payable to the tax debtor within the meaning of s. 224(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) - Whether the courts below erred in concluding that cheques written on a bank account by an account holder and made payable to that account holder, with instructions to deposit the amounts in another of the account holder’s accounts, are demands for payment, once presented to the bank.

The Minister of National Revenue issued three Requirements to Pay to the appellant bank with respect to the tax liability of a lawyer, pursuant to s. 224(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). The lawyer held two accounts with the bank, a lawyer’s trust account and a joint account with another individual. Cheques were drawn on the trust account, with the lawyer identified as the payee. Each cheque was presented to the bank for deposit into the joint account. In each instance, the cheque was accepted by the bank for deposit to the joint account. A credit was made to the joint account, and a debit was made to the trust account. The Minister issued notices of assessment for failure to comply with the Requirements to Pay. After receiving the assessments, the bank filed Notices of Objection, which were rejected by the Canada Revenue Agency. The bank appealed the assessments to the Tax Court of Canada.