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.
Re: Rate to be Applied to Penalties under Subsection 163(2)
We are replying to your memorandum of October 24, 1991 concerning the coming into force provision relating to the increased rates for penalties under subsection 163(2) of the Income Tax Act (the Act).
You outlined the following factual situation:
1.
2. 24(1)
3.
You have asked whether the rate applied to the penalty under subsection 163(2) of the Act is correct or whether the penalty should be applied at a rate of 25%, the rate in effect at the time the taxpayer was first issued a notice of assessment for the 1986 taxation year.
It is the Department's policy not to levy a penalty on a taxpayer for an offense committed prior to the introduction of that particular penalty. Where a penalty is imposed under subsection 163(2) of the Act in respect of an income tax return, the offense is the filing of the return with the omission or false statement in the circumstances described in that subsection. As a result, the Department will only impose a penalty under the new rate of 50% (based on a minimum penalty of $100) where the return containing the omission or false statement was filed after September 13, 1988.
The fact that a notice of assessment was issued in accordance with subsection 152(7) of the Act prior to the date of filing the return does not alter the date on which the alleged offense occurred. Consequently, it is our view that 50% is the correct rate to be used in determining a penalty under subsection 163(2) of the Act for a 1986 return that was submitted on 24(1)
We offer no comment on the validity of the penalty itself as we have not had an opportunity to examine the circumstances under which the penalty was levied.
We trust our comments will be of assistance to you.
P.D. FuocoChiefPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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