This matter (2016 QCCS 2158) was brought by Uber Canada Inc. (“Uber”) against the Quebec tax agency (the ARQ) challenging the legality of search warrants executed by the ARQ on Uber. The warrants stem from allegations by the ARQ that Uber had failed to correctly report and remit its Quebec Sales Tax (“TVQ”) and that Uber had assisted others (its drivers) in committing offences against the Tax Administration Act by assisting others in failing to comply with a revenue law.
Thanks to Neal Armstrong for bringing the case to my attention: his thoughts are here.
Uber opposed the warrants on several grounds: including that Uber didn’t owe tax, that the ARQ had no reasons to suspect that Uber drivers were subject to the TVQ, and also technical issues to do with the law of search warrants.
The judge, in affirming that computers and phones can be seized and imaged as to their entire contents by the ARQ, and that while every file cannot be searched as “the grounds and offences under investigation implicitly limit the scope of the search and any review of material outside the original investigation would be subject to judicial review later” (quoting the Ontario Court of Appeal in R. v. Jones) the seizure of computers and phones themselves were permissible.
Justice Cournoyer’s affirmation of the search warrants provides that:
[186] …il est, à tout le moins, raisonnable de penser que le juge qui a accordé les mandats de perquisitions pouvait tirer la conclusion que les chauffeurs UberX doivent être inscrits auprès des autorités fiscales, percevoir la TPS et la TVQ et les remettre à celles-ci. [My translation: it is at least reasonable to think that the judge issuing the warrants could draw the conclusion that UberX drivers had to register with the tax authorities, collect GST and QST, and remit them to those authorities.]
[187] Il pouvait aussi conclure de la conduite d’Uber, qui ne demandait pas à ses chauffeurs offrant son service UberX de lui fournir les numéros de TPS et de TVQ, qu’elle est pleinement consciente que cela aide ses chauffeurs UberX à éluder le paiement de ces taxes. De la même manière, le fait que le tarif établi pour le service UberX ne prévoit pas les montants de la TPS et de la TVQ justifie la même conclusion. [My translation: he could also conclude that in Uber’s failure to demand that its UberX drivers provide GST and QST numbers, it is fully aware that this aids the drivers to elude payment of tax. Similarly, the fact that the UberX fare does not provide for GST and QST justifies the same conclusion.]
The case raises several interesting issues that are relevant to persons who are the subject of search warrants from tax authorities.
As I have from the time Uber began doing business in Canada, I urge all persons who are now (or are considering becoming) Uber drivers to seek tax advice as to their obligations and the risks that derive from them.
