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: Whether the denial of the dividend refund can be disputed upon the receipt of a nil assessment.
Reasons: Subsection 152(1.2) provides for the ability to object to the determination that no dividend refund is payable.
March 6, 2012
Dear XXXXXXXXXX :
Re: Ability to Dispute the Denial of a Dividend Refund where a Nil Assessment
We are replying to your email of September 12, 2011, concerning the ability to dispute the denial of a dividend refund upon the receipt of a notice that no tax is payable under subsection 152(1) of the Income Tax Act (the "Act"), commonly referred to as a "nil assessment". We apologize for the delay in responding.
You have described a situation involving a taxpayer who received a nil assessment that also indicated that the taxpayer had been denied a dividend refund under subsection 129(1) of the Act. You have asked whether the taxpayer can file a notice of objection in respect of the denial of the dividend refund.
Subsection 152(1) states, in part, that the Minister shall assess a taxpayer's tax and any interest and penalties, if any, payable. Paragraph 152(1)(a) states that the Minister shall determine the amount of any refund under section 129. Notwithstanding the fact that a taxpayer cannot object to a nil assessment, whether a taxpayer can object to a denial of a dividend refund pursuant to section 129 is a separate issue.
Subsection 152(1.2) states that Division I, which includes the provisions governing the filing of a notice of objection, and Division J apply to amounts determined under Division I with any modifications that the circumstances require. It is our view that this would include a determination of a refund under section 129 made pursuant to subsection 152(1), even if the amount of the refund were nil.
Accordingly, a taxpayer that receives a notification that the Minister has determined that no refund is payable under section 129 may file a notice of objection to that determination. The objection may be filed even if the determination is included on a nil assessment. Please note that this does not in any way imply that the taxpayer may object to the nil assessment itself. As stated above, a taxpayer cannot object to a nil assessment.
We trust that our comments will be of assistance.
Terry Young, CA
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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