Executive Summary: Key Legal and Evidentiary Issues

• Limitation period for 2013 reassessment hinged on whether repeated claims for the same expenses constituted a false representation allowing the Agence du revenu du Québec (ARQ) to reassess beyond three years.
• Characterisation of roofing and cabinet work expenses as either current (repairs/maintenance) or capital (construction/improvement) items affected their deductibility and treatment in capital cost allowance calculations.
• Evidentiary sufficiency of documents supporting rental-property expenses in 2014 and 2016, including missing invoices and inconsistent descriptions of the property where work was done, was central to the taxpayer’s failure to discharge his burden.
• Credibility of altered or inconsistent invoices (e.g., handwritten changes to work locations and multiple versions of invoices) significantly undermined the taxpayer’s attempt to link expenses to the rental property.
• Application of the presumption of validity of tax assessments and the taxpayer’s obligation to “demolish” that presumption with clear, precise prima facie evidence guided the court’s assessment of the competing versions of facts.
• Treatment of duplicate claims (same expense claimed multiple times under different tax heads and credits) supported a finding of wilful blindness and thus a false representation sufficient to lift prescription for the 2013 tax year.

Facts of the case

Jean-Marie Daudier owned a residential rental property on rue Verreau in Longueuil, Québec, which he never occupied as his residence and later sold in 2018. The property generated rental income, and Mr. Daudier claimed various expenses related to repairs, improvements, and energy-related work across several taxation years. His income tax returns for the years 2013, 2014, and 2016 included deductions and credits tied to this rental property and, in some instances, to his personal residence.
The Agence du revenu du Québec (ARQ) later reviewed Mr. Daudier’s filings and, on 14 January 2020, issued new notices of assessment (new cotisations) for the 2013, 2014, and 2016 tax years. These new assessments reduced or denied certain deductions and credits connected to the rental property. Mr. Daudier objected to these assessments, and the ARQ maintained or adjusted its position, ultimately issuing a new reassessment for 2013 on 23 June 2022 following his objection, while confirming the 2014 and 2016 assessments.
Mr. Daudier then brought a tax contestation in the Small Claims Division of the Court of Québec under the special small-claims tax contestation regime set out in the Loi sur l’administration fiscale. The dispute involved three main groups of expenses. For 2013, he had claimed a roofing expense of 12,354.06 CAD and a linen-closet cabinet expense of 722.12 CAD connected to the rental building. For 2014, he claimed expenses of 5,900 CAD for windows and 585.73 CAD for replacement of electric valves, which he asserted related to the rental property. For 2016, he claimed expenses for doors and windows (4,000 CAD and 1,114.46 CAD), and certain current expenses for electrical work, flooring materials, and a pyrite-related technical inspection, again alleging they related to the rental property.
The ARQ’s review raised concerns that some expenses had been claimed multiple times under different categories or tax mechanisms (for example, as current rental expenses, as capital expenditures in the capital cost allowance schedule, and as part of a refundable “Écorénov” credit for his principal residence). There were also concerns that some expenses in later years were insufficiently linked, on the documents, to the rental property and appeared instead connected to his personal residence, with invoices variously altered or re-issued. The ARQ therefore reassessed, disallowing or reallocating portions of the claimed amounts.

Legal framework and issues

The court began by outlining the basic tax law framework under the Loi sur les impôts. Taxpayers are required to self-assess by filing complete and honest returns, reporting all income, computing tax owing, and paying it. The ARQ is not bound by the taxpayer’s return; it verifies the information and issues a notice of assessment determining the tax payable. Generally, the ARQ has three years from the original assessment to issue a new assessment adjusting tax, interest, or penalties.
However, this three-year prescription period can be lifted if the taxpayer has made a false representation of facts through carelessness, wilful omission, or fraud. In such cases, the ARQ can reassess “at any time” for the relevant tax year. The court stressed that the false representation need not be fraudulent in the strict sense; it is sufficient that the representation is false, even if made in good faith, provided it meets the statutory threshold.
Another key legal principle was the presumption of validity of tax assessments. Under the Loi sur les impôts, a notice of assessment is presumed valid and correct. This presumption reflects the reality that taxpayers possess and control most of the relevant financial information and documents. If a taxpayer wishes to challenge an assessment, they bear the initial burden to “demolish” this presumption by producing a prima facie case: concrete, sufficiently precise evidence that, if accepted and not contradicted, would show that the assessment is wrong. Vague allegations or unsupported assertions are not enough.
The issues before the court were structured into four questions: whether the ARQ had proven a false representation allowing reassessment beyond three years for 2013; whether Mr. Daudier had produced prima facie evidence to rebut the presumption of validity of the 2013 reassessment; and, separately, whether he had produced sufficient evidence to rebut the 2014 and 2016 reassessments.

Findings regarding the 2013 tax year

The 2013 year raised both a limitation-period and a substantive evidentiary issue. On limitation, the question was whether the ARQ could reassess 2013 after the normal three-year period. The court focused on two sets of expenses: roofing work (12,354.06 CAD) and a linen-closet cabinet (722.12 CAD), both related to the rental property.
The evidence showed that for 2013, Mr. Daudier claimed the roofing expense three times: once as a current rental expense; once as a capital expenditure added to the undepreciated capital cost (PNACC) of the building in the depreciation schedule; and once as part of a refundable Écorénov tax credit for his principal residence. The linen-closet expense was claimed twice: once as a current rental expense and once as a capital item in the PNACC schedule. By effectively double- and triple-counting the same expenditure under distinct tax mechanisms, Mr. Daudier significantly overstated his deductions and benefits.
The court characterised this behaviour as wilful blindness that constituted a false representation of facts within the meaning of the statute. Even if the ARQ could have detected the duplication by cross-checking attached documents, the existence of that possibility did not neutralise the false nature of the representations in the return. This false representation allowed the ARQ to reassess the 2013 tax year beyond the normal three-year limit; the court thus found that prescription did not bar the 2013 reassessment.
Turning to the substance of the 2013 reassessment, the key debate was over the nature of the roofing and cabinet expenses: whether they should be treated as current repairs (deductible in the year as rental expenses) or as capital expenditures (affecting capital cost allowance but not fully deductible as current expenses). In his written contestation, Mr. Daudier argued that the roofing work was capital in nature, but at the hearing he supplied only a minimal evidentiary record: primarily photographs of the property and a copy of the roofing invoice. He also attempted to shift the burden back to the ARQ by demanding that it produce additional proof.
The court emphasised that the onus rested on him to displace the presumption of correctness of the ARQ’s assessment, including on the characterisation of the expenses. The limited documents, coupled with largely vague and argumentative allegations, were insufficient to amount to a prima facie case that the reassessment was wrong. As a result, the presumption of validity of the 2013 assessment remained intact, and his contestation for that year failed.

Findings regarding the 2014 tax year

For 2014, the contested expenses were: a 5,900 CAD expense for the purchase and installation of windows and a 585.73 CAD expense for replacement of electric valves, both allegedly incurred on the rental property. The ARQ had refused these expenses on the basis of incomplete or unreliable documentation, particularly concerning where the work was actually performed.
Regarding the windows, Mr. Daudier claimed he could not provide the original invoice to the ARQ because it had been destroyed in a water damage incident. He offered no coherent explanation for why he could not obtain a replacement invoice from the contractor or otherwise substantiate the work. The court found this failure unexplained and significant, especially since the burden was on him to prove that the expense was real and tied to the rental property.
The electric-valve expense was even more problematic. Initially, he submitted an invoice in which, in printed text, the work site was identified as the address that corresponded to his personal residence, with “idem” indicating the work location was the same as the billing address. The word “idem” was subsequently crossed out, and the address of the rental property was added by hand. The handwriting on this and other documents in the record appeared similar and, in the court’s view, likely belonged to Mr. Daudier himself. The court therefore disregarded the handwritten change and gave weight only to the printed description, which pointed to his personal residence, not the rental property.
Later, he supplied another invoice from the same contractor in which the printed description of the work site was the rental property address. The existence of multiple versions of invoices with different work locations, against the backdrop of handwriting that appeared to originate from the taxpayer, severely undermined their credibility. The court gave very little, if any, probative value to these documents.
Because the taxpayer bears the burden of providing clear, persuasive prima facie evidence, the court concluded that, for 2014, Mr. Daudier had not “demolished” the presumption of correctness of the ARQ’s assessment. The 2014 reassessment stood.

Findings regarding the 2016 tax year

In 2016, the dispute centred on both capital-type and current-type expenses. On the capital side, Mr. Daudier claimed two door and window expenses, one for 4,000 CAD and another for 1,114.46 CAD, which he maintained were incurred on the rental property. The ARQ rejected these as rental-property expenses because the documentation, in original printed form, indicated that the work site was his personal residence. At the same time, the ARQ had allowed these same amounts in calculating a tax credit for his principal residence.
Similar to the 2014 pattern, the court had before it initial invoices whose printed text showed the personal residence as the work location, combined with handwritten notations attempting to link the work to the rental property. The handwriting again resembled that found elsewhere on documents submitted by the taxpayer. The court declined to credit these handwritten modifications. Mr. Daudier also claimed to have sent alternate versions of the contractor invoices in which the printed text listed the rental property as the work site, but the existence of competing versions did not cure the credibility deficit; rather, it intensified concerns about the reliability of the documents. The court thus accorded little weight to this evidence and found that he had not established, even on a prima facie basis, that these expenses truly related to the rental property rather than his residence.
In addition, he claimed three other items as current expenses against his 2016 rental income: 751.09 CAD for electrical work and materials, 538.52 CAD for floating floor and membrane materials, and a further amount for a pyrite-related technical inspection. The ARQ refused these for different reasons. The electrical-work expense had already been allowed once during the verification process; allowing it again as claimed would amount to a double benefit. The flooring expense had been reimbursed by his insurer, so claiming it as a deduction for rental purposes would be inappropriate. As to the pyrite inspection, the ARQ pointed out that this particular expense had never been previously claimed and that the handwritten date on the service contract was ambiguous, possibly indicating 2016 or 2018, creating uncertainty as to the relevant year and the link to the rental income.
Faced with these explanations from the ARQ, it fell to Mr. Daudier to prove that the ARQ’s treatment was wrong. Instead, his position rested mainly on assertions that the ARQ had misinterpreted documents and made errors requiring correction, without backing those claims with robust, objective proof. The court found that he had not provided evidence rising above vague allegation, and thus he failed to rebut the presumption that the 2016 assessment was correct.

Outcome and implications

The court ruled that the ARQ had established that, for 2013, Mr. Daudier made false representations by repeatedly claiming the same roofing and cabinet expenses under different tax mechanisms, which amounted to wilful blindness and opened the door to reassessment beyond the usual three-year limitation period. On the merits, for each of the 2013, 2014, and 2016 tax years, he did not present sufficiently precise, credible evidence to demolish the presumption of validity of the assessments, either as to the nature of the expenses (current versus capital) or as to their connection to the rental property.
As a result, the Court of Québec, Small Claims Division, rejected in full Mr. Daudier’s tax contestation. The successful party was the Agence du revenu du Québec. No monetary award, damages, or costs were ordered in its favour; the judgment expressly states that the contestation is dismissed “sans frais de justice,” meaning no costs are awarded and the total amount ordered in favour of the successful party is zero.