Mont-Bruno – Tax Court of Canada strikes out the Minister’s Reply as not containing sufficiently cogent factual allegations to justify assessing a statute-barred return

A non-profit organization operating a golf course was assessed well beyond the normal reassessment period on the basis that a gain realized by it on selling some wooded land adjacent to its golf course (but on the other side of the road and with a different zoning) was not exempted under s. 149(5)(e)(ii) as being used directly and exclusively in the course of providing its sporting facilities. After striking two allegations of mixed fact and law in the Minister’s Reply, including one that merely paraphrased the s. 149(5)(e)(ii) test rather than containing only factual allegations, Paris J found that the remaining factual allegations in the Reply, if proven, would have been insufficient to establish that there had been a misrepresentation attributable to neglect etc. Accordingly, the Minister’s Reply was struck as disclosing no reasonable cause of action.

However, as it was possible that the Minister would be able to draft an amended Reply to support the late assessment, the Minister was given 60 days to file an amended Reply.

This case suggests that there is a significant burden on the Minister to establish misrepresentation attributable to neglect etc.

Neal Armstrong. Summary of Mont-Bruno C.C. Inc. v. The Queen, 2016-1152(IT)G, 21 March 2017 under s. 152(4)(a)(i).