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: Whether the Minister has appropriately reassessed a public corporation.
Position: Yes.
Reasons: S. 152(4)(b)(i) provides an additional three years to reassess a public corporation in respect of a loss carry-back under paragraph 152(6). When combined with s. 152(3.1), seven years are available for such a reassessment. Accordingly, the reassessment was raised within the specified time.
December 9, 2010
Toronto Centre Tax Services Office HEADQUARTERS
Audit Division Income Tax Rulings
Directorate
Attention: Victoria Ip Lindsay Frank
Large File Case Manager (613) 948-2227
2010-037764
Reassessment Period of a Public Corporation
This is in reply to an email from Antony Cutrara, who has requested a technical interpretation on the application of the reassessment period of a public corporation.
On XXXXXXXXXX , the return of a public corporation for the 2005 taxation year was assessed as filed and a non-capital loss of $XXXXXXXXXX was allowed. The loss was subsequently carried back to the 2002 taxation year and applied to reduce the taxable income for that year, which was originally assessed on XXXXXXXXXX .
Subsequently, on XXXXXXXXXX , expenses in the amount of $XXXXXXXXXX claimed in the return for 2005 were disallowed. Accordingly, that return was reassessed to eliminate the loss claimed on initial filing. The return for the 2002 taxation year was also reassessed to negate the loss previously carried back.
Ordinarily, the Minister cannot reassess a taxation year beyond the normal reassessment period, which, for a public corporation, is defined in subsection 152(3.1) of the Income Tax Act (the "Act") as four years. There some exceptions to this rule, however.
Subparagraph 152(4)(b)(i) of the Act contains one of the exceptions, which allows an additional three years to reflect a loss carry back from a subsequent year under paragraph 152(6)(c). In the instant case, given that the taxpayer is a public corporation, a reassessment of its 2002 taxation year would have had to be issued no later than XXXXXXXXXX . Since the reassessment for that year was raised on XXXXXXXXXX , it is consistent with the provisions of subparagraph 152(4)(b)(i).
Should you have any questions or require additional information, please do not hesitate to contact Lindsay Frank at the number provided above.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Ontario Corporate Tax Division
Income Tax Rulings Directorate
c.c. Antony Cutrara
Large File Auditor
Audit Division
Toronto Centre Tax Services Office
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