Currently, the normal reassessment period for a taxation year is limited to:

• four years, if at the end of the year the taxpayer is a mutual fund trust or a corporation other than a Canadian-controlled private corporation; and

• three years in any other case,

after the earlier of the day of mailing of a notice of an original assessment or a notification that no tax is payable for a taxation year.

However, there are a number of situations in which the CRA is permitted to assess beyond the normal reassessment period.

For example, the CRA also has an unlimited time to make an adjustment when there has been a misrepresentation by a taxpayer because of neglect, carelessness, wilful default, or fraud in either filing the return or supplying information required by the Income Tax Act.

Under proposed legislation, beginning with taxation years that end after October 2, 2016, the CRA may at any time reassess an income tax return beyond the normal reassessment period where:

• the taxpayer does not report in their income tax return a sale or other disposition of real estate by the taxpayer;

• the taxpayer does not file an income tax return but the CRA issues an assessment of tax (ex. after a review of a taxpayer who did not file a return); or

• the taxpayer owned property directly or indirectly through a partnership and the partnership did not report the sale or other disposition in the T5013, Partnership Information Return, if it was required to file one.

Under this extended reassessment period, the reassessment is limited to amounts reasonably relating to the unreported or previously unreported disposition of real estate.

No. There are two exceptions:

• the new rule does not apply to a taxpayer that is a real estate investment trust; and

• in the case of a disposition by a corporation or partnership, the new rule applies only where the real property is also capital property.

In all other cases, the rule applies to any disposition of real property.

Real property that is capital property includes any real or immovable property which, if sold, would result in a capital gain or a capital loss. Capital property does not include the trading assets of a business, such as inventory.

Starting when the taxpayer or partnership requests or files the amendment to the income tax return or partnership information return to report the disposition, the CRA has three years to audit or review the income tax return of the taxpayer and issue a notice of reassessment to the taxpayer.

However, the CRA can still issue a reassessment beyond this period when there has been a misrepresentation by a taxpayer because of neglect, carelessness, wilful default, or fraud in either filing the return or supplying information required by the Income Tax Act.

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies and guidelines will be posted as they become available.