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The Quebec Taxation Act provides that the Minister can redetermine tax, interest and penalties payable for any year outside the normal three-year assessment period only when the taxpayer “has made a misrepresentation that is attributable to negligence or willful default or has committed fraud in filing the return “ for the year.  

Revenue Quebec has taken the position that a reasonable assumption that the taxpayer has made a misrepresentation is sufficient to allow it to make a redetermination outside the normal reassessment period.   

In the context of offshore accounts, Revenue Quebec argues that evidence that an account was opened in a year outside the normal reassessment period is sufficient to permit it to arbitrarily reassess the year and all subsequent years. Where the account has been voluntarily disclosed, Revenue Quebec provides the taxpayer with the choice of arbitrary reassessments and having the capital taxed in a single year.

Gerald Rip, David Sohmer, Stéphanie Pépin and Jean-François Reed, members of Spiegel Sohmer’s tax group, co-authored an article in which they challenge the legality of Revenue Quebec’s position. They argue that the legislation and the jurisprudence place the burden on Revenue Quebec to prove that there was a misrepresentation in each year being reassessed.  A n assumption, however reasonable, is insufficient.

The article appears in (2017), vol. 36, no. 4, Revue de planification fiscal et financière at pages 511 -528 and is titled ”Revue critique sur l’application de la méthode de l’avoir net rétrospectif au-delà de la période normale de cotisation”.