The Appellants appealed reassessments of tax by the Minister of National Revenue in respect of life insurance policies they terminated in 2017.
The Minister reassessed the Appellants under paragraph 56(1)(j) and subsection 148(1) of the Income Tax Act, claiming they failed to include income from the policy terminations.
The Tax Court of Canada allowed the appeals and vacated the reassessments, finding that the Minister failed to make an essential assumption of fact regarding the 'adjusted cost basis' of the policies immediately before their disposition.
Without this assumption, the onus did not shift to the Appellants to disprove the reassessments, and in the absence of evidence on the adjusted cost basis, the reassessments could not stand.
