Executive Summary: Key Legal and Evidentiary Issues

• Nathan Hervé Sumegne Ngnabe sought the annulment of Notice of Reassessment No. MU950646C01 issued by Revenu Québec on May 4, 2022, which disallowed claimed net business losses of $26,784.69 for the 2020 taxation year.
• Revenu Québec concluded, following an audit, that Ngnabe did not operate a business, and set his alleged net business income at $0.00.
• Central to the appeal was the presumption of validity attached to tax assessments under section 1014 of the Taxation Act, which the taxpayer must "demolish" with prima facie evidence.
• Documentary evidence tendered by Ngnabe — five unsigned vehicle purchase contracts — contained significant inconsistencies, including dates predating the vendor company's incorporation and its TVQ registration, and duplicated label and stock numbers.
• Shipping and export documents were largely illegible, did not bear Ngnabe's name, and referred to goods such as used bicycles and clothing rather than the alleged spare auto parts.
• Unable to reconcile his bank withdrawals of $48,495.78 with the claimed expenses, Ngnabe failed to rebut the presumption of validity, and his application was dismissed with legal costs in favour of the Agence du revenu du Québec.

Facts of the case

Nathan Hervé Sumegne Ngnabe applied to the Court of Québec (Administrative and Appeal Division) for the annulment of a Notice of Reassessment (No. MU950646C01) issued by the Agence du revenu du Québec (Revenu Québec) on May 4, 2022, for the 2020 taxation year. For the period of January 1 to December 31, 2020, Ngnabe had declared net business losses of $26,784.69, which he attributed to a business involving the purchase, sale, and export to Cameroon of severely accidented used vehicles (VGA) and spare automobile parts. Following an audit of his income, Revenu Québec concluded that Ngnabe did not operate a business and that the claimed losses were made without entitlement; the reassessment established his alleged net business income at $0.00. Ngnabe objected, and on June 29, 2023, Revenu Québec confirmed the reassessment in its decision on objection. In his appeal, Ngnabe asked the Tribunal to grant the business losses and to reinstate the original Notice of Assessment issued on June 8, 2021, in which the loss of $26,784.69 had been claimed.

Legal framework at issue

Rather than a contractual dispute, this case turned on statutory provisions and the burden of proof in tax litigation. The reassessment benefited from the presumption of validity under section 1014 of the Taxation Act. Drawing on the Supreme Court of Canada's decision in Hickman Motors Ltd. v. Canada and Québec Court of Appeal authorities including Bermex Internationale, Alertpay, and Manufacture Kute Knite, the Tribunal explained that the taxpayer bears the initial burden of "demolishing" the presumption through prima facie evidence showing the facts underlying the assessment are incorrect; only then does the burden shift to the tax authority to prove the assessment by a preponderance of evidence. Vague and ambiguous allegations do not suffice, and a taxpayer's simple assertion generally benefits from documentary or circumstantial support. The Tribunal also relied on Stewart v. Canada regarding what constitutes a source of income from a business, on Revenu Québec's Interpretation Bulletin IMP. 81-2/R1 concerning sections 28 and 81 of the Taxation Act on the deductibility of business losses, and on section 34 of the Tax Administration Act, which requires anyone operating a business to keep registers and supporting documents.

The court's reasoning and analysis

At trial, Ngnabe testified alone, calling no other witnesses and adding no relevant documents beyond those already provided to Revenu Québec during the audit and objection. He produced no accounting registers as required by section 34 of the Tax Administration Act, and did not call the accountant he referenced to explain how the claimed loss was calculated. The Tribunal found the documents he produced unconvincing, in some cases illegible, and unreliable. To establish the claimed loss, Ngnabe filed five purchase contracts naming M & A Auto Groupe as vendor and himself as buyer; Revenu Québec's objection to their production was dismissed, the Tribunal holding that its concerns went to probative value rather than admissibility. On the merits, however, the contracts suffered from serious incoherencies. A contract for a 2014 Toyota Rav4 was dated January 7, 2020, yet M & A Auto Groupe was operated by 9412-8667 Québec Inc., a company incorporated only on February 4, 2020, and registered for QST purposes only as of March 16, 2020 — meaning the QST registration number appearing on the January 7 and March 7, 2020 contracts had not yet been issued on those dates. Identical label numbers and stock numbers appeared across different contracts without plausible explanation, one contract bore the date August 10, 2021 despite a stated delivery in March 2020, and none of the five contracts carried Ngnabe's signature. Registers of the Société de l'assurance automobile du Québec showed the 2014 Volkswagen Jetta — which Ngnabe claimed to have bought and exported to Cameroon in December 2020 — was in fact sold by M & A Auto Groupe to one Alexandre Mathieu Simard on December 6, 2021, and Ngnabe never appeared as its owner. His bank statements showed 2020 withdrawals and transfers totalling $48,495.78, but he could not reconcile that figure with the alleged purchases of $22,600 for three vehicles and $5,286.64 in parts, nor with his written representations referring to expenses of $27,986.64 increased to $34,470, nor with his trial testimony referring to four vehicles totalling $32,000, transport costs of $9,000, and parts of $5,386.64. His claim of paying approximately US$7,800 in cash (valued at CAD$9,000) for transport rested on his assertion alone, while the shipping documents were essentially illegible, did not mention his name, referred to four vehicles where he claimed losses for three, bore the word "Draft," and appeared to describe used bicycles, chairs, mattresses, refrigerators, and clothing rather than spare auto parts. Overall, the Tribunal characterized his evidence as vague, imprecise, and ambiguous.

Ruling and outcome

Concluding that Ngnabe failed to demolish the presumption of validity attaching to the Notice of Reassessment through prima facie evidence, the Tribunal, per the Honourable Yves Hamel, J.C.Q., dismissed the application for annulment of Notice of Reassessment No. MU950646C01 dated May 4, 2022, in a judgment rendered on May 11, 2026. The successful party was the Agence du revenu du Québec, in whose favour the Tribunal awarded legal costs; the judgment does not specify the amount of those costs, so no exact monetary figure can be determined from the decision.