10 December 2012 External T.I. 2012-0459421E5 - Subsection 160.1(3)

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 an assessment which has been raised under the provisions of subsection 160.1(3) of the Income Tax Act (the "Act") must be made according to the time limitations provided by section 152 of the Act.

Position: No

Reasons: The wording of the Act grants the Minister the discretion to reassess a taxpayer under the provision of subsection 160.1(3) at any time.

XXXXXXXXXX
2012-045942
Gillian Godson

December 10, 2012

Dear XXXXXXXXXX

Re: Application of Subsection 160.1(3)

We are writing in reply to your email of August 16, 2012 requesting guidance with respect to the interaction of the provisions in section 152 of the Income Tax Act (the "Act") as they apply to an assessment made under subsection 160.1(3) of the Act.

In your inquiry you have stated that although subsection 160.1(3) provides that the Minister may assess a taxpayer at any time, Division I applies to an assessment under 160.1(3) as if the assessment were made under section 152 of the Act. Specifically, you would like to confirm your view that an assessment under subsection 160.1(3) of the Act must be made within the timeframes imposed by subsection 152.

Our Comments

In general, in situations where a taxpayer has received a refund that is greater than the refund to which they were entitled to, subsection 160.1(1) of the Act provides that the taxpayer is required to repay the excess in addition to any interest computed from the date the excess amount of the refund was paid to the taxpayer. Subsection 160.1(3) of the Act provides that the Minister may assess at any time a taxpayer in respect of excess refunds and overpayments for which the taxpayer is jointly and severally liable under subsection 160.1(1), (1.1), (2.1) or (2.2). The provisions of subsection 160.1(3) state that Division I applies "in respect of an assessment made under this section as though it were made under section 152".

Section 152 contains the rules relating to assessments and reassessments of tax, interest and penalties payable by a taxpayer and to determinations and redeterminations of amounts of tax deemed to have been paid by a taxpayer. The time within which the Minister may generally reassess or make a redetermination is known as the "normal reassessment period". For an individual that period is the three years beginning after the day of sending of the notice of an original assessment or of the notification that no tax is payable for that year.

With respect to your question concerning whether an assessment under 160.1(3) of the Act must be made within the deadlines imposed under section 152, we can look to the views taken by The Supreme Court of Canada concerning a comparable section of the Act. In The Queen et al v Addison & Leyen Ltd. Et al 2007 SCC 33 it was established that there is no limitation period for when the Minister can issue an assessment under section 160 of the Act. A parallel analysis can be made with respect to subsection 160.1(3) of the Act, as the wording of section 160 is similar to the wording of the provisions of subsection 160.1(3). Accordingly, it is our view there is no limitation period as to when the Minister can raise an assessment provided by subsection 160.1(3) regarding an amount deemed to be payable by subsection 160.1(1) of the Act. The use of the words "at any time" in both subsections 160(2) and 160.1(3) provide the Minister with the discretion to assess a taxpayer at any time, including beyond the normal reassessment period provided by section 152. Subsection 160.1(3) does not provide any conditions that limit the time for raising an assessment.

However, once an assessment is raised under subsection 160.1(3) of the Act, the provisions of section 152 apply to the subsection 160.1(3) assessment. Therefore, for example, any reassessment of the subsection 160.1(3) assessment must be made within the time limitations provided by section 152 of the Act.

We trust these comments will be of assistance.

Yours truly,

Terry Young, CPA, CA
Manager, Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch