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: Can subsection 220(3) be used to extend a reassessment period which has become statute-barred?
Reasons: Statute-barred date is determined by using the date of the Initial Notice of Assessment or Nil Assessment.
July 12, 2013
Denis Chartrand HEADQUARTERS
T2 Strategy & Coordination Section Income Tax Rulings
Headquarters Assessment and Benefit Directorate
Services Branch Katharine Skulski
Attention: Susan Kennedy
Extension of the reassessment period
We are replying to your enquiry of April 23, 2013, wherein you asked whether subsection 220(3) can be used to extend the reassessment period for a year that is statute-barred.
In the situation you described, the corporate taxpayer failed to file a tax return and the CRA subsequently issued an "arbitrary assessment" pursuant to subsection 152(7). A further three years passed before the taxpayer filed a tax return for the taxation year. As the normal reassessment period had expired and the taxation year was statute-barred, the CRA refused to reassess the year.
Unless otherwise stated, all statutory references in this memorandum are to the Income Tax Act, R.S.C. 1985, c. 1 (5th Suppl.) (the "Act"), as amended to the date hereof.
Subsection 220(3) provides the Minister with the discretion to extend the time for making a return under the Act. However, such discretion may only be exercised for a taxation year that has not become statute-barred. The statute-barred date is not determined based on the date the tax return is filed, but on the date that the initial Notice of Assessment or "Nil Assessment" is sent. Although the initial assessment was issued pursuant to subsection 152(7) and not as a result of a tax return filed by the taxpayer, it is still an assessment. As such, the initial assessment started the normal reassessment period.
We refer you to subsection 152(4) which sets out the circumstances in which an assessment, reassessment or additional assessment of tax may be made beyond the expiration of the normal reassessment period.
We trust that these comments will be of assistance.
Terry Young, CPA, CA
Manager, Administrative Law Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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