The answer is “no”. In this case decided in 2023 the taxpayer argued:

“the Minister’s agents at the CRA had inappropriately discounted his late tax return contrary to their legal obligation to accept it as accurate and reliable.”

The judge rightfully answered:

“As a result of not filing for 2009, the Minister exercised her right to assess Mr. Papouchine, pursuant to subsection 152(7) of the Act on January 11, 2016. By the same subsection, the Minister was not bound by the subsequent late tax return, itself filed 7 years after it was legally due. Even if the late tax return had been filed on time, the Minister was not bound by it by virtue of the same subsection.”

The judge also gave a clear explanation for why the appeal was doomed from the start:

“There simply is no documentary or reliable evidence to challenge the assumptions. Aside from Mr. Papouchine’s oral testimony of the existence of a business, subcontractors, an intermediate agent and the incurrence of the expenses, there is no supporting evidence whatsoever. There are no contracts between Universal or Emex and the placement agency or between such agency and Mr. Papouchine or AP Technologies. In such absence of documents or third-party testimony, the Court cannot discard the relevant assumptions of the Minister. Further, the T4s are issued directly to Mr. Papouchine; there is no invoice to an agency and payment record to Mr. Papouchine or his proprietorship from any intermediate agency.

On the issue of the expenses, even if a business source of income were found to exist, there are no invoices for motor vehicles expenses, insurance or parking. Likewise, evidence of the sub-contracts, invoicing and payments to sub-contractors were not produced. The Act requires every person carrying on business to keep relevant business records: subsection 230(1). There were no such records.

The absence of any records also prevents the Court from considering allowing any deduction of expenses from employment. Further, Mr. Papouchine specifically resisted such characterization of employment expenses. But again, this does not matter, since evidence of such allowable employment expenses does not exist, whether reasonable, incurred during the year, or for employment purposes. None of the above credibly existed before the Court.”

While the answer is “no”, the CRA does not have to accept a taxpayer’s return as accurate, the CRA can be quite reasonable where the taxpayer has documentary evidence of their claims. If you or someone you know has been assessed for tax owing in the last 90 days, get in touch with a ZheroTax pro and get an honest appraisal of the likelihood of a successful appeal based on the facts and documentation you have available.