Onus of Proof on CRA

The Tax Court of Canada recently allowed an application for an extension to serve a notice of objection to an assessment. Perhaps the most interesting aspect of the case was the dismal performance of the Canada Revenue Agency (CRA).

In Hamer v. The Queen (2014) TCC 218, the taxpayer lived in a rural area and claimed that he never received the assessment in the mail, which disallowed a claim for charitable donations in the amount of $18,750. This was the second time that the application came before the Honourable Justice Woods.

Justice Woods had initially told the taxpayer that he could not succeed by taking the position that he simply didn’t receive the assessment, but under the Income Tax Act it is correct to place the onus on the CRA to establish that it was at least placed in the mail and properly addressed to the taxpayer .

The legislation is seemingly not difficult for the CRA to satisfy: all they have to prove is that the assessment was placed in the mail addressed to the taxpayer. Mr. Hamer lived in a rural area and admitted to having difficulty receiving mail sometimes, but the Court would not accept that the non-receipt was a problem with Canada Post, which would avail the CRA from responsibility and place it squarely on the taxpayer.

The evidence proffered by the CRA in attempting to prove its case was less than impressive. An affidavit was filed attempting to establish that the assessment was mailed to the taxpayer, but according to Justice Woods it was “lacking in detail in important respects”.

It wasn’t just the detail that was lacking though, the affidavit proved to be essentially useless because the important facts testified to within were not within the personal knowledge of the deponent and therefore amounted to hearsay evidence. Hearsay is at best unpersuasive, but generally inadmissible.

In this instance, the people with the first hand information were not made available to the Court for cross-examination. At paragraph 13 Justice Woods asks: “What is the point of having a sworn affidavit if the people with the information are not required to swear the accuracy of their statements?” Furthermore, the affidavit of Hamza Momoh, the litigation officer on this file for the CRA, did not attend the hearing apparently because he works in a different city.

Even though assessments are deemed delivered to a taxpayer if they were mailed to the taxpayer, the CRA must prove that they were in fact mailed.