20 January 1993 Income Tax Severed Letter 9237427 - Statute-barred Date where Two Notices of Assessment Sent

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.

January 20, 1993

LONDON DISTRICT OFFICE Personal andGeneral
Business Audit Section
Large File Case Manager A. Humenuk
(613) 957-2134
Attention: J.A. Taylor
923742
Statute-barred Date for
1987 T2 Return for XXXXXXXXXX
We are replying to your memorandum of December 8, 1992
concerning the date on which the above noted return becomes
statute-barred.

Two notices of assessment were issued in respect of this return: the first, on April 24, 1989 and the second, on December 13, 1990. It is your view that the second notice of assessment replaces the first since the second states that it was issued to correct the first notice (it appears that the error was in the calculation of instalment interest). Departmental records use the December 13, 1990 date as the original date of assessment. If the first date is applicable, the return will be statute-barred on April 24, 1993 but if the second date is applicable the return will become statute-barred on December 13, 1994. You have asked for our comments on which date should be used for the purpose of determining the normal reassessment period as defined in subsection 152(3.1) of the Act.

The question can be restated as to whether the first notice can be said to be valid and binding on the Department notwithstanding the error in the calculation of instalment interest and the issue of a second notice of assessment.

Subsection 152(8) of the Act confirms for greater certainty that an assessment is valid and binding notwithstanding any error contained therein or any error in the proceedings under the Act relating to that assessment. It is our view that the April 24, 1989 assessment notice is clearly valid and that the normal reassessment period for the corporation's 1987 return as defined in subsection 152(3.1) of the Act will end on April 24th of this year.

What is the effect of the second notice of assessment issued for the same taxation year? Under subsection 152(4) of the Act, the Minister may "reassess or make additional assessments or assess tax, interest or penalties under (Part I)" (emphasis added) within the normal reassessment period unless the conditions of paragraphs 152(4)(d), (e) or (f) apply. While the Minister is able to correct a previous assessment by way of a new assessment (as opposed to a reassessment or additional assessment), the effect of the new assessment does not extend the normal reassessment period. In fact, the postamble to paragraphs 152(4)(a), (b) and (c) ensures that such a reassessment, additional assessment or new assessment for a particular taxation year must be issued within the appropriate time frames as established by the first notice of assessment received by the taxpayer.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch