Joint Committee, "COVID-19 Measures", 1 June 2020 Joint Committee Submission

Summary Under
Tax Topics - Income Tax Act - Section 180 - Subsection 180(1)

Submission that Crown appeal rights not be revived

  • S. 6 of the draft Time Limits and Other Periods Act (COVID-19) (the “Proposals”) would have the effect of suspending, for the period March 13, 2020 to September 13, 2020 (subject to earlier termination), (a) any limitation or prescription period for commencing a proceeding before a court;(b) any time limit in relation to something that is to be done in a proceeding before a court; and (c) any time limit within which an application for leave to commence a proceeding or to do something in relation to a proceeding is to be made to a court.
  • For example, the Crown may have failed to appeal a Tax Court decision to the Federal Court of Appeal within this period, such that the Tax Court decision would have become final
  • It is recommended regarding any ITA proceedings (and similarly for ETA proceedings) that the Proposals provide that, without the taxpayer’s consent, their effect would not include displacing acquired rights and reopening proceedings which have achieved finality before the announcement of the Proposals.
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(3.1)

Expansion of scope of specified extendible deadlines

It is recommended that Column 2 to the Schedule to the draft Time Limits and Other Periods Act (COVID-19) (the “Proposals”) replace the reference in column 2 to “subsection 37(11), paragraph (m) of the definition investment tax credit in subsection 127(9)” by “any provision of the Act or the Income Tax Regulations that requires or permits a taxpayer or a partnership to do something by a particular time or date or within or during a particular period, or that provides for consequences arising if something is not done by a particular time or date or within or during a particular period”.

Expected scope of exercise of discretion re extension of normal and other reassessment periods

Regarding ITA ss. 152(3.1) and (4) and ETA ss. 298(1) and (2), and based on informal discussions with CRA officials, it is understood that the “Minister would likely exercise the authorities provided under s. 7 of the Proposals in a manner that would not displace acquired rights by reopening administrative proceedings which had achieved finality before the announcement of the Proposals, nor in a manner that could be duplicative or inordinately disruptive of certainty in proceedings and the rule of law, or not justified by the need to avoid unfair or undesirable effects of the COVID-19 crisis.” The following observations give shape to our understanding of these expectations:

  • Where the reassessment periods contemplated in ITA ss. 152(3.1) and (4) and ETA ss. 298(1) and (2) had expired before the announcement of the Proposals, no such order would permit an assessment without the taxpayer’s consent, nor would an order pursuant to s. 7(4) of the Proposals cancel or vary the effect of the Minister’s failure to assess or reassess prior to the expiry of a normal reassessment period that ended prior to the announcement of the Proposals.
  • For audits that had not been materially disrupted by COVID-19, an order issued by the Minister would extend such a reassessment period.
  • Any order(s) would not result in a total prolongation exceeding six months.
  • Any such order would not suspend or extend any such reassessment period which would otherwise expire within a reasonable amount of time after September 13, 2020.
Summary Under
Tax Topics - Excise Tax Act - Section 298 - Subsection 298(1) - Paragraph 298(1)(a)

Scope of proposed discretion to extend deadlines

  • S. 7 of the Time Limits and Other Periods Act (COVID-19) (the “Proposals”) would grant the Minister the exceptional power inter alia to order the suspension or extension of a time limit, or any other period, that is established under any ITA or ETA listed in the Schedule. The Joint Committee suggests that there are provisions missing from the Schedule, and suggests that it contain more generic language to cover what is being aimed at.

Understanding of reasonable limitations on CRA’s discretion to extend reassessment periods during COVID-19

One set of provisions that are already listed are ITA ss. 152(3.1) and (4) and ETA ss. 298(1) and (2), setting out permitted (re)assessment periods. Based on informal discussions with CRA officials, it is understood that the “Minister would likely exercise the authorities provided under s. 7 of the Proposals in a manner that would not displace acquired rights by reopening administrative proceedings which had achieved finality before the announcement of the Proposals, nor in a manner that could be duplicative or inordinately disruptive of certainty in proceedings and the rule of law, or not justified by the need to avoid unfair or undesirable effects of the COVID-19 crisis.” The following observations of the Joint Committee give shape to that understanding:

  • Where such reassessment periods had already expired before the announcement of the Proposals, any such order would not permit an assessment without the taxpayer’s consent.
  • For audits that had not been materially disrupted by COVID-19, no order would extend such a reassessment period.
  • Any order(s) would not result in a total prolongation exceeding six months.
  • Any such order would not suspend or extend any such reassessment period which would otherwise expire within a reasonable amount of time after September 13, 2020.