Canada v. Bowens
A-507-94
Hugessen J.A.
20/2/96
4 pp.
Appeal from Tax Court decision allowing taxpayer's appeal against reassessment-Original assessment based on assumption taxpayer not at arm's length with corporation acquiring certain option rights initially granted to taxpayer; reassessment based on ss. 245(2), (3)-Following notice of opposition, Minister confirming reassessment based on assumption taxpayer, corporation at arm's length; tax due under s. 7(1)(b)-On appeal Crown not pleading assumption taxpayer, corporation at arm's length-Judge holding, because of mutually contradictory but unpleaded assumptions made in reassessment process, burden on Crown to show taxpayer, corporation at arm's length-Appeal dismissed-Unpleaded assumptions having no effect on burden of proof: Pollock, J.A. v. The Queen (1993), 94 DTC 6050 (F.C.A.)-Crown bearing burden of proving arm's length relationship because fact on which validity of reassessment depended, and since no assumption to that effect pleaded, Crown not having benefit of any reversal of onus-Result not turning on burden of proof as ample evidence establishing nature of relationship-Income Tax Act, S.C. 1970-71- 72, c. 63, ss. 7(1)(b) (as am. by S.C. 1977-78, c. 1, s. 3), 245(2).