Burden of Proof on the Crown in Certain Circumstances
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The initial burden of proof in a tax dispute is generally on the taxpayer to demonstrate that the filing position taken by the taxpayer was correct.
There are some exceptions to the general rule that the taxpayer bears the initial burden of proof. In these circumstances the CRA and the Crown must initially prove that their position on assessment was correct.
For example, the CRA bears the initial burden of proof when:
- assessing gross negligence penalties;
- assessing a taxpayer pursuant to the General Anti-Avoidance Rule (GAAR); and
- establishing that it is appropriate to assess a taxpayer beyond the normal three or four year limitation period.
Additionally, if a fact is not something that is within the taxpayer’s knowledge, the rationale for placing the initial burden of proof on the taxpayer does not apply, and the taxpayer can argue that the initial burden of proof should be placed on the CRA.
- if an assumption, although pleaded, was not actually made by the auditor or appeals officer in assessing the taxpayer, then the initial burden of proof does not fall on the taxpayer; and
- if an assumption, although made by the auditor or appeals officer, was not included in the pleadings filed on behalf of the CRA, then the initial burden of proof does not fall on the taxpayer.
- if the Government lawyer representing the CRA misses the filing deadline to reply to your appeal, your facts are assumed to be correct.
Understanding who bears the initial burden of proof is important when assessing the prospects of success in your tax dispute.