Principal Issues: Where in year 3 by virtue of ss.152(6), the taxpayer requests a reduction of tax for year 1 by means of a loss carryback from year 3 to year 1, but then subsequently in year 5, revises the request in order to increase the loss carryback from year 3 to year 1, would the interest charged pursuant to subsections 161(1) and (7) be charged on the combined reduction up to the date of the later request, or would interest be charged on each reduction separately up to the date of each respective request?
Position: Interest would be calculated on the original reduction from the balance due date up to the date of the 1st request and interest would be calculated on the subsequent reduction, up to the date of the later request.
Reasons: The general charging provision for interest under subsection 161(1) provides that where the total taxes payable exceeds the total of all amounts paid at or before the balance due day for a taxation year, the taxpayer shall pay interest on the excess, computed for the period during which that excess is outstanding. However, it should be noted that the CRA's policy is to disallow a request for reassessment to reduce taxes payable where the request is based solely on an increased claim of a particular (as opposed to substituting one for another) permissive deduction when the taxpayer had originally claimed less than the maximum allowable (see paragraph 4 of IC75-7R3).
