In Anchor Pointe Energy Ltd. v. the Queen, 2007 FCA 188 the Court held “[i]t is trite law that, barring exceptions, the initial onus of proof with respect to assumptions of fact made by the Minister in assessing a taxpayer’s tax liability and quantum rests with the taxpayer.”
The phrase “barring exceptions” is an important one in law because an inflexible application of a rule will often result in unfairness. However, as soon as exceptions are permitted there will be questions as to the principles that govern the rule that grants the exception. In Mignardi v. The Queen, 2013 TCC 67 the Court expounded upon the exception to the rule.
In Mignardi, the appellant had been a director of a company. He was assessed for GST which, it was alleged, had not been remitted. The Court concluded that despite “timely and repeated requests” that the appellant made for particulars, “the Minister failed to provide sufficient information concerning the audit and assessments [of the company] to allow him to adequately respond to the director’s liability assessment”.
The Court held that in the circumstances of the case the onus of proof should be reversed. It arrived at this conclusion on the basis of the principle that where the facts concerning the basis of the tax liability are “exclusively or peculiarly within the knowledge of the Minister that the burden will be shifted.”
This is not a statement of a new legal principle. However, the Court’s analysis in Mignardi brings clarity to and affirms the importance of the principle. Further, the case illustrates the importance of having facts in a particular case, which support the shifting of the onus. As is well known, a careful litigation strategy is essential to the development of the evidence which will support a court’s factual findings.