In the recent case of McMillan v. Canada, the Federal Court of
Appeal has reaffirmed the onus of proof rules in tax appeals. While
the rules were never particularly unsettled at the federal level,
the somewhat anomalous decision of the British Columbia Court of
Appeal in Northland Properties v. The Queen in Right of the
Province of British Columbia, appeared to cast doubt on
prior Federal Court of Appeal pronouncements as well as the
decision of Justice L'Heureux-Dubé in Hickman Motors Ltd. v. Canada. In
Northland, the B.C. Court of Appeal took issue with the
concept, articulated by Justice L'Heureux-Dubé in
Hickman, that the onus was on the taxpayer to
"demolish" the assumptions pleaded by the Minister by
means of raising a prima facie case at which point the
burden shifts to the Minister to prove the assumptions on the
balance of probabilities:
 Before us, counsel for the
Crown made persuasive submissions on the issue of the so-called
"prima facie" standard:
L'Heureux-Dubé J.'s use of "prima facie"
was made in the context of a case in which the Crown had not called
any evidence whatsoever; it was relying solely on its assumptions.
It is certainly possible in such circumstances that a prima facie
case, or even one with "gaps", would be sufficient to
displace the Crown's assumptions, but the prima facie
standard described by Justice L'Heureux-Dubé should not
be interpreted as having altered the usual standard of proof in tax
cases: see the comments in Sekhon v. Canada,  T.C.J.
No. 1145 at para. 37; and Hallat v. The Queen (2000),  1
C.T.C. 2626 (F.C.A.).
The facts in McMillan are uncomplicated and not
particularly interesting. The taxpayer had a business in the
Dominican Republic and claimed a number of expenses in connection
with that business. The Tax Court denied most of the expenses claimed
on the basis that they were not proven by the taxpayer. The
taxpayer appealed to the Federal Court of Appeal and her appeal was
dismissed on the basis that she did not demonstrate any material
error on the part of the Tax Court judge.
The interesting part of the decision is the Federal Court of
Appeal's articulation of the rules relating to onus of proof in
 Before concluding these reasons,
we note that the appellant did not raise in her memorandum of fact
and law any issue with respect to the Judge's statement at
paragraph 19 of the reasons, and repeated at paragraph 21, that the
appellant "has the initial onus of proving on a balance of
probabilities (i.e. that it is more likely than not), that any of
the assumptions that were made by the Minister in assessing (or
reassessing) the Appellant with which the Appellant does not agree,
are not correct." In our respectful view, it is settled law
that the initial onus on an appellant taxpayer is to
"demolish" the Minister's assumptions in the
assessment. This initial onus of "demolishing" the
Minister's assumptions is met where the taxpayer makes out at
least a prima facie case. Once the taxpayer shows a prima
facie case, the burden is on the Minister to prove, on a balance of
probabilities, that the assumptions were correct (Hickman Motors Ltd. v. Canada,  2 S.C.R.
336 at paragraphs 92 to 94;House v. Canada, 2011 FCA 234, 422 N.R.
144 at paragraph 30).
Thus, the Federal Court of Appeal has once again embraced the
prima facie standard as the test that must be met by a
taxpayer to displace or demolish assumptions pleaded by the
Minister. While there may be a different standard applicable in
provincial tax appeals in British Columbia, the reaffirmation of
the prima facie standard by the Federal Court of Appeal is
welcome news in federal tax appeals.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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