Bakorp – Federal Court of Appeal finds that the only remedy for the failure of CRA to make a s. 152(4.3) adjustment was judicial review of that decision
Following the resolution of a tax dispute for taxation year 1, the taxpayer (Bakorp) requested that the Minister reduce the amount of a non-capital loss that it had carried forward to taxation year 2, and claimed the amount of that loss instead in its return that it filed for taxation year 3. The Minister denied the request and reassessed taxation year 3 to deny the claimed loss.
Webb JA found that in order for Bakorp to have tested its view - that the Minister should have made the requested adjustment to taxation year 2 - it should have sought judicial review of this decision. The Tax Court of Canada lacked jurisdiction to consider this decision of the Minister not to make the s. 152(4.3) adjustment.
Since Bakorp did not seek judicial review by the Federal Court of this decision, the non-capital losses claimed in taxation year 2 had not been adjusted, and per s. 111(3)(a), they could not be claimed again in taxation year 3.
Neal Armstrong. Summary of Bakorp Management Ltd. v. Canada, 2019 FCA 195 under s. 152(4.3).