Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: What is the CRA's position with respect to changes in assessing practice and retroactive application?
Position: See document
Reasons: See document
2005-016467
CLHIA Conference - May 26, 2005
Revised- 13 June 2005
Question 1
Retroactive Changes in Assessing Practice
The life and health insurance industry understood, on the basis of discussions with senior CRA officials, that changes in assessing positions would be applied prospectively. However, it appears that this position has not been applied systematically.
Question
What is the CRA's position with respect to changes in assessing practice and retroactive application?
Agency's Response
Generally speaking, retroactive changes will not be made when there is a change in the application of an interpretation or position contained in an IT Bulletin unless otherwise specified. If the change in the IT Bulletin is not favourable to taxpayers, it will normally be effective for the current and subsequent taxation years or for transactions entered into after the date on which the change is published. In the absence of a change to an IT Bulletin as mentioned above, CRA will normally reassess a taxpayer within the statute barred limitation in accordance with subsection 152(4) of the Income Tax Act. This policy is set out in Information Circular 75-7R3 entitled "Reassessment of a return of income".
Specific situations have arisen in the past where, following consultations with the CLHIA, a decision was made by CRA to apply an assessing position prospectively. However, it should be noted that these decisions were made in light of extenuating circumstances and should be considered the exception rather than the rule.
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