This recent tax court case explains how the Minister discharges the burden of proof onus when a net worth assessment has been used beyond the normal reassessment period:

[32] In addition, in the Lacroix decision, the Federal Court of Appeal dealing with a situation of a reassessment issued beyond the normal reassessment period and where the reassessment was based on a net worth method, confirmed that the Respondent in order to satisfy the burden under subsection 152(4) of the Act does not need to prove the source of income detected through the application of the alternative assessment technique used by the CRA. In addition, about the burden of proof under subparagraph 152(4)(a)(i) of the Act, the Federal Court of Appeal added:

“What, then, of the burden of proof on the Minister? How does he discharge this burden? There may be circumstances where the Minister would be able to show direct evidence of the taxpayer’s state of mind at the time the tax return was filed. However, in the vast majority of cases, the Minister will be limited to undermining the taxpayer’s credibility by either adducing evidence or cross-examining the taxpayer. Insofar as the Tax Court of Canada is satisfied that the taxpayer earned unreported income and did not provide a credible explanation for the discrepancy between his or her reported income and his or her net worth, the Minister has discharged the burden of proof on him within the meaning of subparagraph 152(4)(a)(i) and subsection 162(3).”

Presumably and similarly, where the assessment is made within the normal reassessment period, the assessment is deemed valid under subsection 152(8) unless the taxpayer can provide credible explanation for the discrepancy between his or her reported income and his or her net worth.