Pre-trial steps in tax litigation, such as discovery examinations, typically involve two parties - the taxpayer and the Minister of National Revenue. Pre-trial steps can occasionally involve third parties, but generally only in extraordinary circumstances. The recent Tax Court of Canada decision in Sim v. HMK, 2025 TCC 22 illustrates circumstances in which third parties can be ordered to provide information.
In Sim, the Respondent sought to involve two third parties in two different ways. First, the Respondent sought to discover the father of the two taxpayers under s. 99 of the Tax Court of Canada Rules (General Procedure) (the “Rules”). Second, the respondent sought to obtain the taxpayers’ account records under the control of a third-party brokerage, under s. 86 of the Rules.
While the Court reiterated that these remedies should be applied sparingly, and only where there is demonstrably strict compliance with the Rules, it found that in this case, the Respondent did meet the threshold required. In doing so, the Court ordered the taxpayers’ father to attend examinations for discovery, and ordered the brokerage to produce the requested records, if such records exist.