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Income Tax Act: Limitations on Garnishment Powers

Canada
The Income Tax Act grants relatively broad powers to the Minister of National Revenue to compel a person who is liable to make a payment to a tax debtor to instead pay the amount to the Minister. The recent judgment by the Supreme Court of Canada ("SCC") in Canada Trustco Mortgage Co. v. R examined the reach of the Act in the context of the banking system, and whether a drawee bank is liable to make payment to a payee of a cheque. Taxand Canada reviews the judgement.

For the case background, and to read the full article from Taxand Canada, click here.

Taxand's Take


The dissenting justices expressed concern about the negative ramifications of the majority's decision on other areas of law. For example, the presence of a joint account may thwart the collection of child or spousal support given the majority's restrictive interpretation of garnishment powers. Thus, if the negative consequences are as wide ranging as feared, it may not be long before legislators revisit the issue.

Your Taxand contact for further queries is:
Eric Koh
T. +1 613 786 0121
E. eric.koh@gowlings.com

Taxand's Take Author