In Osinski v R, 2013 TCC 71, the Court wrote:
20 With respect to both parties, the law in my opinion is simply as stated in C. (R.) v McDougall, C. (R.), … 2008 SCC 53, above by Justice Rothstein in paragraph 49 and I repeat, “the trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred”.
21 All relevant evidence must be scrutinized including oral evidence not necessarily supported by other documentation. In House [2011 FCA 234], the Court was clear that oral evidence cannot be presumed to be of insufficient quality where a finding of credibility was not made as to the witnesses’ testimony. The Court specifically found at paragraph 62 that the trial judge erred in that “… the appellant had offered evidence which, unless disbelieved or rebutted, was capable of establishing a prima facie case ‘demolishing’ the Minister’s assumptions”.
I often tell clients that oral testimony can win a Tax Court appeal, if the testimony is detailed, consistent and convincing. And why not? As a Justice lawyer said to me once, we send people to jail based on oral testimony.
The Tax Court, however, is a lot like the CRA: both of them prefer supporting documentation.
