Lawyers have an obligation to their clients, first and foremost, to be advocates for the client in a situation of either litigation or criminal matters. We have an obligation to be frank with our clients and to provide them with legal advice; in other words, to interpret the law, for example.
Lawyers have an ethical duty to the state: we have an obligation with respect to the courts. We are considered officers of the court. We cannot mislead a tribunal or a judge. That's essentially the obligation to the state.
However, confidentiality and solicitor-client privilege would prevent a lawyer from calling the CRA to report that a client has come into the office. We obviously cannot advise a client how to break the law; we have to tell the client that “this is the law”. But I do not have a duty to the state to ensure that the client files a tax return or reports his income.
It is similar to someone asking about drinking and driving. I can tell people what the penalties are for drinking and driving and I can tell them that they shouldn't do it, but I can't stop somebody from drinking and driving.
It's the same thing with tax avoidance. I can legitimately design a plan for a client and advocate for that client as to the legality of the plan, but I cannot contribute to a fraud or tax evasion or be a dupe of a client.