Sarmadi v. Canada (June 21, 2017 – 2017 FCA 131, Stratas, Webb, Woods (separate opinions by each Justice).
Précis: On the face of it this was a run-of-the-mill appeal involving a net worth assessment against a denturist/cabdriver for the failure to report roughly $150,000 over a period of two years. The taxpayer was unsuccessful in the Tax Court an appealed to the Federal Court of Appeal. Justice Woods, with whom, Justice Stratas and Justice Webb concurred, found no reversible error on the part of the trial judge. Justice Webb wrote an extensive concurring opinion dealing with the issues of onus of proof in the case of Ministerial assumptions of fact. Essentially he found that there was no difference between facts pleaded by a taxpayer and Ministerial assumptions denying facts alleged by the taxpayer; in both cases the onus was on the taxpayer to establish the disputed facts on a balance of probabilities. Thus notwithstanding earlier jurisprudence that speaks of the taxpayer raising a prima facie case demolishing the Minister’s assumptions Justice Webb believes that simply means that the taxpayer must disprove the Minister’s assumptions on the balance of probabilities (at least in the case of denials of fact). This is a matter that has been discussed for years in the tax community and the decision of Justice Webb clearly throws another log on the fire. Justice Stratas on the other hand declined to express an opinion on the point. Justice Woods concurred with Justice Stratas on the matter. In any event the appeal was dismissed with costs.
Decision: Justice Webb’s very erudite decision boiled down to a few propositions:
 In my view, a taxpayer should have the burden to prove, on a balance of probabilities, any facts that are alleged by that taxpayer in their notice of appeal and that are denied by the Crown. In most cases this should end the discussion of the onus of proof since the assumptions of fact made by the Minister in reassessing the taxpayer would generally be inconsistent with the facts pled by the taxpayer with respect to the material facts on which the reassessment was issued.
 If there are facts that were assumed by the Minister in reassessing a taxpayer and that are not inconsistent with the facts as pled by that taxpayer, it would also seem logical to require the taxpayer to prove, on a balance of probabilities, that these facts assumed by the Minister (and which are in dispute and are not exclusively or peculiarly within the Minister’s knowledge) are not correct. Requiring a taxpayer to disprove the facts assumed by the Minister in reassessing that taxpayer simply puts the onus on the person who knows (or ought to know) the facts. It also puts the onus on the person who indirectly asserted certain facts in filing their tax return that would be inconsistent with the facts assumed by the Minister in reassessing such taxpayer.
 Once all of the evidence is presented, the Tax Court judge should then (and only then) determine whether the taxpayer has satisfied this burden. If the taxpayer has, on the balance of probabilities, disproven the particular facts assumed by the Minister, based on all of the evidence, there is no burden to shift to the Minister to disprove what the Tax Court judge has determined that the taxpayer has proven. Either the taxpayer has disproven the assumed facts or he, she or it has not.
Justice Stratas was both complimentary and guarded in his comments:
 I have read Justice Webb’s reasons on the issue of the burden of proof in tax appeals. I commend him on his exploration of this issue.
 The issue has been considered before in this Court. My colleague’s reasons somewhat revisit this issue and articulate it somewhat differently. I find much of what my colleague says to be thoughtful, illuminating and attractive.
 However, at this time and in these circumstances, I decline to express a definitive opinion on the correctness of his views on this fundamental point. The insights of commentators may be helpful. Judges in the Tax Court may also have useful insights. As well, in a future appeal in this Court where the issue matters, other counsel may also be able to assist.
This will undoubtedly cause a stir in the tax community and will likely lead to the Federal Court of Appeal having to revisit the question in the near future. The difficulty with Justice Webb’s reasoning is that it appears to jettison decades of jurisprudence dealing with the necessity for a taxpayer to raise only a prima facie case to reverse the presumption in favour of the Minister. The matter is also complicated by the fact that Justice Webb’s comments are confined to assumptions denying facts alleged by the taxpayer. Quaere the case where the Minister expressly pleads facts exclusively or peculiarly within the knowledge of the taxpayer? Should the same reasoning apply?
Whatever the answers, it is a safe bet that we have not seen the end of this particular jurisprudential enigma.