Ross – Tax Court finds that untruthfulness on audit may not matter for statute-barring purposes

If you file a return honestly on the basis of the information available to you at the time, but you are untruthful to CRA on a subsequent audit when you become aware of a problem, can CRA now reassess that return (which otherwise is statute-barred) on the basis that such reassessment "can reasonably be regarded as relating to …any misrepresentation made by the taxpayer…that is attributable to neglect, carelessness or willful default or any fraud…in filing the return or supplying any information under this Act."  Bocock J’s reasoning would appear to suggest that your misrepresentation "reasonably related to a period subsequent," rather than to the return-filing year, so that the year cannot be opened up.

Ross concerned the registration of a flimsy pension plan rather than the filing of a return, so that it related only to the branches of ss. 152(4)(a)(i) and (4.01) respecting misrepresentations in "supplying any information under the Act" rather than in filing returns.  In obiter dicta, Bocock J boldly went one step further and stated that "the Minister would not be entitled to reassess outside the normal period under paragraph 152(4) where the taxpayers' only misrepresentations were made outside the returns and occurred solely in supplying information under the Act."  This will be controversial.

Neal Armstrong.  Summaries of Ross v. The Queen, 2013 TCC 333 under ss. 152(4.01), 152(4)(a)(i) and Reg. 8502(a).