The appellant challenged the use in a tax evasion prosecution of information obtained through statutory audit powers under the Income Tax Act.
The Court held that the Act draws a distinction between audit functions aimed at verifying tax liability and investigative functions aimed at determining penal liability.
It adopted a contextual predominant-purpose analysis to identify when the relationship between tax officials and the taxpayer becomes adversarial and full Charter protections apply.
On the facts, the audit did not become a penal investigation until the file was referred to Special Investigations on May 4, 1994, so the April 11 materials and the search warrant were valid.
However, banking records later compelled under s. 231.2(1) after the criminal investigation had commenced violated s. 7 and remained excluded.
