Viterra – Tax Court of Canada finds that consequential ETA reassessments are subject to essentially the same limitations as under the ITA

CRA reassessed a company well beyond the normal reassessment period in order to allow input tax credits, which it previously had denied within the normal reassessment period (being GST on fees charged by the investment manager for employee pension plans), but made an offsetting addition of GST to the reassessment on the basis that the company was resupplying the investment management services to the pension plans and had failed to charge GST on the fees therefor imputed by CRA.

CRA argued unsuccessfully that ETA s. 298(3) was less limiting than ITA s. 165(5), so that it was “not precluded from reassessing on the basis of different transactions or even from increasing net tax.” D'Arcy J instead found that s. 298(3) was quite similar to s. 165(5), stating that CRA could not use it “to increase the net tax of the GST registrant or to take into account different transactions that the ones that formed the basis of the reassessment that was made within the statutory reassessment period.”

However, here it was unclear that the reassessment of the resupply did not relate to the same transaction as the previous assessment of the third-party manager supplies, so that he left it to the trial judge to sort this out (this being a Rule 58 application that was devoid of evidence).

Neal Armstrong. Summary of Viterra Inc v. The Queen, 2018 TCC 29 under ETA s. 298(3).