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: (a) Must a request for an adjustment be made by filing an amended return or by latter, including a T1 Adjustment Form, if the matter involves an individual?
(b) When is the effective interest date for a consequential assessment?
(c) If the auditor does not make the consequential assessment as requested, when and how does one file a Notice of Objection, or seek other recourse?
(d) Does the CRA have any published guidelines concerning consequential assessments?
Position: (a) A taxpayer (any taxpayer) who requests an adjustment must do so in writing, without the need to file any particular form.
(b) Interest would accrue from the balance due day; however, if the amount assessed is paid in full before the end of the period specified in the notice, no interest would be payable, pursuant to section 161.2.
(c) A Notice of Objection is filed in response to a Notice of Assessment. If no assessment is issued, an objection cannot be filed. If the auditor does not make the requested assessment, the taxpayer could seek recourse from the auditor's supervisor.
(d) The CRA does not have any published guidelines on consequential assessments. Such are available, however, from the Department of Finance in a document entitled "Explanatory Notes to the Income Tax Act".
QUESTION #9 - CONSEQUENTIAL ASSESSMENT
Subsection 152(4.3) permits the Minister to reassess a taxpayer beyond the normal reassessment period where the reassessment arises as a consequence of an assessment or a decision on an appeal either of which changed a taxpayer's balance in a particular year. The reassessment is allowed only to the extent that it can reasonably relate to the change in the balance in that year, and may be made only where the Act requires the inclusion, or allows the deduction, in computing a taxpayer's balance for the year of an amount relating to the deduction or inclusion that was adjusted for the other year. An example of this would be where there has been a change to the calculation of the carry forward of a loss occasioned by an adjustment to a balance of an earlier year.
Under subsection 152(4.4), the taxpayer's balance is the income, taxable income earned in Canada or any loss for the year, or the tax or any amount payable by, any amount refundable to, or any amount deemed to have been paid or overpaid by, the taxpayer for the year.
Question:
(a) Must a request for an adjustment to be made by filing an amended tax return or by a letter, including a T1 Adjustment Form, if the matter involves an individual?
Answer:
A taxpayer (any taxpayer) who requests an adjustment must do so in writing, without the need to file any particular form.
Question:
(b) When is the effective interest date for a consequential adjustment?
Answer:
Interest would accrue from the balance-due day; however, if the amount assessed is paid in full before the end of the period specified in the notice, no interest would be payable, pursuant to section 161.2.
Question:
(c) If the auditor does not make the consequential assessment as requested, when and how does one file a Notice of Objection, or seek other recourse?
Answer:
A Notice of Objection is filed in response to the issuance of an assessment, and if no assessment is issued, an objection cannot be filed. If the auditor does not raise the assessment as requested, the taxpayer could seek recourse from the auditor's supervisor.
Question:
(d) Does the CRA have any published guidelines concerning consequential assessments?
Answer:
The CRA does not have any published guidelines on consequential assessments. Such are available, however, in a document published by the Department of Finance, entitled "Explanatory Notes to the Income Tax Act".
Lindsay Frank
2011-040447
June 2-3, 2011
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