CRA accepts that it must issue a requested notice of determination of loss arising from a taxpayer-requested adjustment provided that the adjustment is only partially accepted

A taxpayer may request a notice of determination of loss for procedural reasons, e.g., to give it the right to object, or to start statute-barring running. CRA commented on the following two conditions in s. 152(1.1) for the Minister to be required to issue such a determination:

1. The Minister ascertained the amount of a taxpayer’s loss for a taxation year.

2. The loss amount ascertained differs from the one reported in the taxpayer’s income tax return.

Regarding the first condition, CRA indicated that the previous CRA interpretation “that no ascertainment occurs when the change is requested by the taxpayer is not supportable,” i.e., the ascertainment can arise in response to a taxpayer request for an adjustment, as well as after an audit.

CRA considers that the second condition is not satisfied if a taxpayer adjustment request is completely denied (i.e., there is no variance from the original return) or if the adjustment request is completely accepted (i.e., there is no variance from the return as amended).

However, if such a request is partially agreed to by the CRA, then a Notice of Determination can be issued if the taxpayer requests one as the amount ascertained by the Minister differs from the amount reported by the taxpayer in the filed return.

Neal Armstrong. Summary of 6 December 2021 Internal T.I. 2019-0792581I7 under s. 152(1.1).