CRA indicates that the s. 162(7) penalty for late-filing of a T1135 will be imposed automatically

In 2015-0588971C6, CRA indicated that the proposition that “the late-filing penalty of $2,500 under subsection 162(7) applies automatically… is currently under study.” Having completed that study, CRA is:

still of the opinion that [this penalty] applies automatically where all the conditions of that subsection are satisfied. …

CRA went on to acknowledge the six-year normal reassessment period under s. 152(4)(b.2), and referenced the exception thereto for neglect etc.

There will be circumstances where a taxpayer has a due diligence defence, for example, a reasonable view (albeit mistaken) that the situs of the property in question was in Canada. CRA’s answer appears to indicate that any such defence will be ignored at the initial assessment stage, and does not mention that is can be raised at the Notice of Objection stage.

Neal Armstrong. Summaries of 6 October 2017 APFF Financial Strategies and Instruments Roundtable, Q.14 under s. 162(7) and s. 152(4)(a)(i).