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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
1. Whether a notification that no tax is payable is required where loss balance recalculated in a statute-barred return.
2. Whether the taxpayer is entitled to request a determination under 152(1.1) on the statute-barred return
Position TAKEN:
1. no notification is required where there is no change to taxes, interest or penalties etc.
2. there are no legislated time limits on a taxpayer request for a loss determination under 152(1.1) of the Act, only on redeterminations, as per 152(1.2).
Reasons FOR POSITION TAKEN:
1. A loss balance in a statute-barred year can be altered to the extent that no notice of assessment is necessitated.
2. Since the Minister may ascertain a loss balance that varies with what the taxpayer reported and he may do so in a statute-barred year the taxpayer may make a determination request at any time as well.
August 11, 1995
Vancouver Tax Services HEADQUARTERS
Appeals Division J.A. Szeszycki
Attention: Thea Kreuger (613) 957-8953
951801
NIL Assessments and Loss Determinations
This is in reply to your memorandum of July 10, 1995 in which you requested our views as to the requirement to issue a notification to the taxpayer in circumstances where Appeals recalculates a non-capital loss in a statute-barred year and whether a taxpayer under these circumstances can request a loss determination under subsection 152(1.1) of the Income Tax Act (the Act).
The situation described in your memorandum involves a multiple year audit reassessment in which one of the years, 1987, was a loss year. The reported loss for the year was recalculated to NIL as part of the reassessment and a notification that no tax was payable was sent to the taxpayer in respect of the 1987 year. The taxpayer filed a notice of objection with respect to each of the years reassessed except 1987. As a result of Appeals Division's review, it has been concluded that the 1987 loss is greater than NIL. You ask whether this second change to the computed loss requires that another notification that no tax is payable must be sent to the taxpayer.
Once a return has become statute-barred no change can be made to the return that would alter the assessed taxes payable for that year. As reiterated in the correspondence to which you referred in your memorandum, a change can be made to a return that is normally closed to reassessment as long as no assessment notice is necessitated. In our view, such a change does not require an official notification that no tax is payable.
Subsection 152(1.1) of the Act provides that where the Minister has ascertained that the actual amount of certain losses, as described within that provision, is different than the amount reported by the taxpayer on his or her return, the taxpayer may request that the Minister determine the actual amount of the loss and so notify the taxpayer in writing. Neither that provision nor any related provision imposes any time frame within which the request by the taxpayer to the Minister must be made. As a result, the fact that the return is now statute-barred does not negate the taxpayer's entitlement to request the determination. In addition, the wording of that provision does not preclude the Minister from ascertaining a loss where the loss was not previously recognized at all. Once the Minister issues the notice of determination the taxpayer has the right of appeal within the time frames provided in section 165 of the Act but only with respect to the amount of the loss as determined by the Minister.
P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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