As reported in the Globe and Mail on Thursday, with follow-up in yesterday’s National Post, the Federal Court of Appeal ordered [
pdf 104K] eBay to turn over records related to Canada Revenue Agency tax investigations.
At question in the appeal was whether section 231.2 of The Income Tax Act required eBay to produce the information about Power Sellers despite it being “foreign-based information”, housed in servers located outside of Canada. “Foreign-based information” is the subject of a comprehensive code in section 231.6.
The principal question to be decided in this appeal is whether the information sought by the Minister is “foreign-based” because it is “available or located outside Canada” for the purpose of subsection 231.6, despite the fact that the appellants, Canadian corporations, have been authorized to access it in Canada for use in their business, but do not download it to their computers.
The Court held that the information sought was not “foreign-based information” because even though it is stored on servers outside Canada, the Court considered that the information was also located in Canada because of its “accessibility to and use by the appellants.”
While this case focused on the Income Tax Act definition of “foreign-based information,” I wonder to what extent the Court’s thinking may be applied to issues associated with Canadian law being applied to internet content that is housed on foreign servers.
What other types of content are located off-shore and have been presumed to be beyond the reach of Canada’s legal system?