Moore
November 2022 Newsletter

If the Canada Revenue Agency assesses or reassesses you for income tax (or GST/HST), you have to prove the assessment wrong. If you file a Notice of Objection and the CRA turns you down, you can appeal to the Tax Court of Canada. But in Court you cannot simply challenge the government to prove that it is right. The onus is on you to disprove the assessment, on a “balance of probabilities”.

Many people find this surprising and disturbing. They feel that it goes against one’s right to be considered “innocent until proven guilty”. However, it does not.

To understand this, you need to understand that when the CRA issues you an assessment, you are not being charged with an offence. You are simply being assessed tax. Even if you are assessed interest and “penalty”, that is still a civil assessment. It may seem punitive, but the cost is purely monetary. You are not being “fined”, merely assessed tax, interest, and penalty. There is no concept of “wrongdoing” or “innocence”; there is only an assessment.

You have to show that an assessment is wrong to dislodge it. Otherwise, it is valid. There is a reason for this. We have a “self‑assessment” system of tax administration, and the facts relating to your income are normally solely within your possession. As a fair tradeoff for this information being in your hands, the onus is on you to disprove the assessment.

On the other hand, there are also offences under the Income Tax Act (for GST/HST, under the Excise Tax Act). If you are charged with an offence, you are into the criminal system of rules. Punishment can be a fine (not a “penalty”) or imprisonment, and the Crown must prove its case “beyond a reasonable doubt”. As with other criminal charges, you are innocent until proven guilty.

It is important to understand the difference between civil assessment and criminal prosecution, if you receive something indicating that you are being penalized by the CRA.

Last modified on November 1, 2022 12:00 am
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