After you file a notice of appeal, the Crown has 60 days from the day the Registry transmits the notice of appeal to the Minister of National Revenue (CRA) to file a reply (unless an application is made to have the appeal heard under the General Procedure Rules).
How Is a Reply Structured?
A reply is generally structured as follows:
The reply starts by giving some background on the appeal, such as the taxation year(s) under appeal, the reassessment(s) under appeal, etc.
Next, the reply will refer to the facts mentioned in the notice of appeal and state which facts are:
- denied; or
- unknown (to the Crown).
The reply then generally gives a history of the key dates up to the appeal, including details of the reassessment(s).
This next section is important, as the Crown is required to state here the findings or assumptions of fact made by the CRA when reassessing. When the CRA reassesses a taxpayer, it relies on facts. These facts are called “assumptions” because the CRA need not prove each and every single fact. If a taxpayer is uncooperative, the CRA can “assume” a fact and let the taxpayer set the record straight in court.
Example: The taxpayer is a freelancer and claimed business expenses of $14,000 in 2014. The CRA decides to audit this taxpayer and, in the course of the audit, asks him to support his business expenses. The taxpayer was only able to provide receipts for $8,000 and claims that the receipts for the remaining $6,000 were lost. In the absence of evidence to support the business expenses of $6,000, the CRA auditor is entitled to assume that those expenses were never incurred.
Facts assumed by the CRA are presumed to be true, except for specific circumstances. What does this mean concretely? It means that you must bring forward evidence at trial to disprove the assumptions of fact made by the CRA.
Why are the assumptions of fact presumed to be true? Because you, as the taxpayer, are in the best position to prove or disprove a fact. Therefore, if the CRA made a mistake, you should be able to prove that assumption wrong.
After the assumptions of fact, the Crown can state other facts, which were not assumed, but which the Crown may rely upon in court. The Crown has the burden to prove these other facts.
Provisions Relied Upon
In this section, the Crown will state the legislative provisions it is relying upon to support its case.
In this last section, the Crown will state the reasons that support its position. It is common for the Crown to rely on many (alternative) arguments in support of a single position.
For example, if the Crown’s position is that the amounts claimed by the taxpayer as business expenses are not deductible, the Crown could argue that “the expenses claimed by the appellant are not deductible because the appellant did not carry on a business. Alternatively, if the appellant carried on a business, the expenses are not deductible because they were not made or incurred for the purpose of gaining or producing income from his business.”
Last updated: October 4, 2018