One sometimes hears that a taxpayer’s task in a Tax Court appeal is to “demolish” the assumptions of the CRA (as listed in the Crown’s Reply) by proving them wrong on a balance of probabilities. Webb JA, in Morrison v. Canada, 2020 FCA 93, aff’g 2018 TCC 220, wrote the following in response:
[32] In my view, this case illustrates a point that I had raised in Sarmadi [2017 FCA 131] in relation to the relevant facts as pled by an appellant in an appeal to the Tax Court. It raises the issue of what role does the notice of appeal play in a Tax Court hearing? Focusing solely on the assumptions made by the Minister in a reply filed in a Tax Court hearing disregards the material facts that a taxpayer had pled in their notice of appeal or that the taxpayer would need to rely on to support the tax return that they had filed.
The TCC General Procedure Rules require a notice of appeal to allege the material facts on which the taxpayer relies when appealing from a reassessment. The Court held that the taxpayer should be required to prove the facts alleged in a notice of appeal, on a balance of probabilities (and not just prima facie, as argued by the taxpayer), if the Crown puts the facts in issue. The taxpayer cannot just focus on the reply, make a prima facie case against the assumptions and then hope that the onus will shift to the Crown.
