Mammone – Tax Court of Canada finds that an RPP revocation beyond the normal reassessment period retroactively validated an unsupportable reassessment under s. 56(1)(a)(i)
The CRA revocation of a registered pension plan (the “New Plan”) was invalid due to inadvertent failure to comply with the 30-day notice requirement in s. 147.1(12). The taxpayer argued that this meant that the contemporaneous assessment of him under s. 56(1)(a)(i) for having purportedly transferred the commuted value of his (OMERS) pension plan to the New Plan was ill-founded at the time – and that CRA’s subsequent issuance of a further retroactive deregistration of the New Plan represented a new basis for reassessment that was prohibited by s. 152(9).
Graham J rejected this argument, finding that the retroactive nature of the subsequent valid revocation caused “an altered timeline to replace the original timeline,” so that the assessment under s. 56(1)(a)(i) was retroactively validated. In rejecting the argument under s. 152(9), he stated:
The basis for reassessment is and always has been that the commuted value of the OMERS pension was transferred to a non-registered pension plan. … [D]ue to the retroactive nature of the revocation, the facts underlying that basis of reassessment were always present.
It did not matter that the second (this time, valid) revocation occurred well beyond the normal reassessment period. However, Graham J stated that if the reassessment in question had also been issued beyond the normal reassessment period, it would have been statute-barred, as the taxpayer could not be imputed with knowledge, at the time of filing his return, of the subsequent retroactive invalidation of the plan.