Premier Fasteners – Tax Court of Canada notes that CRA can use the s. 152(7) alternative assessment approach at any time

While auditing the 2013 and 2014 taxation years of the taxpayer, CRA repeatedly asked for supporting accounting documentation, to no avail. It then issued a requirement to RBC for the taxpayer’s bank statements, and used them to perform a bank deposit analysis. It then reassessed the taxpayer pursuant to s. 152(7), based on the results of that analysis by inter alia adding unreported revenue of $1.8 million and $4.6 million for the 2013 and 2014 taxation years, respectively.

Before finding that the bank deposit analysis as performed was reliable and not fundamentally flawed, and largely affirming the reassessments insofar as they related to understated revenue, Derksen J stated (at para. 28):

[S.] 152(7) does not require that the taxpayer’s records be inadequate before the Minister can rely on an alternative assessment technique. Thus, the Court does not have to be satisfied that it was necessary for the Minister to use an alternative assessment technique. The Minister can use an alternative assessment technique at any time regardless of the state of the taxpayer’s records … .

Gross negligence penalties were also sustained, given that it should have been evident that the bookkeeper was not able to handle the workload.

Neal Armstrong. Summaries of Premier Fasteners Inc. v. The King, 2026 TCC 2 under s. 152(7), s. 163(2) and s. 261(1) – relevant spot rate.