Within two years of the dissolution of the taxpayer pursuant to s. 210(3) of the CBCA, the ARQ assessed the taxpayer to increase a taxable capital gain realized by it, prior to its dissolution, by reducing the reported adjusted cost base of the shares whose disposition generated that gain. Six days later, and also within the two-year period, the ARQ revived the taxpayer pursuant to s. 209 of the CBCA.
In rejecting of the taxpayer’s submission that the notice of assessment should have been for a nil amount since, at the time of its issuance, the taxpayer was still dissolved, Breault JCQ referred with approval to the proposition in Watts (2023 TCC 11) that the Minister could assess a dissolved corporation within two years of its dissolution pursuant to s. 226(2)(b) of the CBCA and, following such two-year period, could also assess it if the corporation was revived. Here, given that both the assessment and revival occurred within the two-year period, the assessment was clearly valid.
In reaching this conclusion, Breault JCQ referred to authorities (e.g., Simard-Beaudry) to the effect that a tax liability arose as the income was generated and was not dependant on a notice of assessment being issued for the amount thereof.
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