Canada's June 3 policy release on acquiring information from taxpayers was a good excuse to explore the state of disclosure law in that country, especially given recent U.S. developments like the Supreme Court's refusal to consider Textron's case and the IRS's draft schedule on uncertain tax positions. Two things I found interesting were that (1) Canada, unlike the United States, has no privilege that applies to accountants, and (2) that one of the tests for whether privilege applies brings in the "opinion of the community" about the relationship between the client and the person to whom information is disclosed.

On the second point, one of the cases dealing with privilege in Canada (Tower v. Minister of National Revenue) quoted American Professor John Henry Wigmore, whose 1904 treatise on evidence set out four principles that help determine whether a communication is privileged. One of these is whether the relationship is "one which in the opinion of the community ought to be sedulously fostered." Relationships that are sedulously fostered to the extent that privilege may apply include those with doctors, sexual assault therapists, and clergy, the Tower court said.

Administering a refreshing dose of perspective, the court said the reason for this "is obvious. Canadian society puts a much higher value on the physical, mental and spiritual integrity of a person than on personal wealth. It is recognized that unnecessary harm and suffering could result from deterring an individual from consulting a doctor, a sexual assault therapist, or a member of the clergy. The worst that could happen if a person is discouraged from seeking income tax advice is that the person might fail to take advantage of a tax saving opportunity, unfortunate perhaps, but not a threat to one's physical, mental or spiritual well being."

Hard to argue with that.

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