Zero-Rated Supplies: Do Not Forget The Burden Of Proof!

The burden of proof in tax matters is a topic frequently addressed by commentators and dealt with in provincial and federal case law. However, the concept itself is sometimes confused with other tax concepts. For example, many taxpayers consider the concept of the burden of proof and that of compliance with legislative and regulatory consumption-tax requirements to be identical, whereas they are actually two distinct concepts, albeit interconnected in law.

The requirements under sales tax statutes and regulations are prescribed by the actual wording of a statute and/or regulation and must be met in order for a legal right or obligation to apply. The burden of proof, on the other hand, is a concept denoting the taxpayer's obligation to show that it has met the conditions imposed under applicable consumption-tax laws and regulations. These two concepts can be easily confused, as was the case in the Contact Lens King¹ decision of the Federal Court of Appeal.