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: Where a corporate taxpayer has filed for a particular taxation year a notice of revocation of a waiver, can the taxpayer file another waiver for that particular taxation year.
Position: If the particular taxation year is not statute-barred, the taxpayer can file another waiver.
Reasons: The law.
September 9, 2010
XXXXXXXXXX Tax Services Office HEADQUARTERS
Income Tax Rulings
Attention : XXXXXXXXXX Directorate
XXXXXXXXXX Guy Goulet CA, M.Fisc.
(613) 946-3323
2010-037951
XXXXXXXXXX ("Opco")
XXXXXXXXXX We are writing in response to your email of September 2, 2010, wherein you have requested our views on the interpretation of subsection 152(4) of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended ("Act"), in the circumstances described below.
All statutory references in this letter are references to the provisions of the Act.
Background
1. The normal reassessment period, within the meaning of subsection 152(3.1), for Opco in respect of its 2005 taxation year is the period that ended on July 21, 2009.
2. The normal reassessment period, within the meaning of subsection 152(3.1), for Opco in respect of its 2006 taxation year is the period that ended on August 17, 2010.
3. On July 9, 2009, Opco filed with the Canada Revenue Agency ("CRA") a waiver in prescribed form within the normal reassessment period in respect of its 2005 taxation year.
4. On May 25, 2010, Opco filed with the CRA a waiver in prescribed form within the normal reassessment period in respect of its 2006 taxation year.
5. On May 25, 2010, Opco filed with the CRA a notice of revocation of the waivers in respect of its 2005 and 2006 taxation years.
6. On August 17, 2010, Opco filed with the CRA a second set of waivers in respect of its 2005 and 2006 taxation year.
7. On August 19, 2010, Opco clearly expressed that their intention in filing the waivers of August 17, 2010 was to allow them additional time to provide the necessary information to complete the ongoing SR&ED reviews of these two taxation years and to have a meeting with CRA to resolve the contentious issues.
Issue
The issue is whether the waivers filed on August 17, 2010 in respect of Opco's 2005 and 2006 taxation year are valid. More specifically, you would like to know if this second set of waivers replaced the first set of waivers filed and if it cancelled the two notices of revocation of a waiver filed on May 25, 2010.
Pursuant to subparagraph 152(4)(a)(ii), the CRA may make a reassessment for a particular taxation year after the taxpayer's normal reassessment period in respect of the year if the taxpayer has filed with the CRA a waiver in prescribed form within the normal reassessment period for the taxpayer in respect of the year. A taxpayer may revoke a waiver by filing a notice of revocation. In such a situation, subsection 152(4.1) limits the period during which the CRA may reassess the taxpayer to six months after the taxpayer has notified the CRA of the revocation of the waiver. The CRA's long standing position is that a notice of revocation of waiver cannot be withdrawn once it has been filed with the CRA. However, if the taxation year involved is not statute-barred, the taxpayer can file with the CRA another waiver in respect of that taxation year.
We are of the view that the waiver filed on August 17, 2010 with the CRA in respect of Opco's 2006 taxation year is a valid waiver because it was filed within the normal reassessment period in respect of Opco's 2006 taxation year. The notice of revocation of the waiver filed with the CRA on May 25, 2010 in respect of Opco's 2006 taxation years does not apply to that August 17, 2010 waiver. Pursuant subsection 152(4.1), that notice of revocation applies to a particular waiver of a specific date (the one filed on May 25, 2010) and does not concern itself with the issues of a subsequent waiver.
However, we are of the view that the waiver filed on August 17, 2010 with the CRA in respect of Opco's 2005 taxation year is not a valid waiver because it was not filed within the normal reassessment period in respect of Opco's 2005 taxation year (which ended on July 21, 2009). This position is consistent with Canadian Marconi Co v. The Queen [91 D.T.C. 5626 (F.C.A.)], where it was held that a waiver must be given within the normal assessment period in order to permit the Minister to make a reassessment.
Consequently, we are of the view that pursuant to subsection 152(4.1), the period during which the CRA may reassess Opco for its 2005 taxation years is limited to six months after the date of the notification of the revocation of the waiver filed on May 25, 2010 (i.e., November 25, 2010). Beyond that date, the CRA would have no power to make a reassessment for that particular taxation year unless one of the other exceptions described in paragraph 152(4)(a) to (d) applies or subsection 165(5) applies.
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the CRA's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity. Requests for this latter version should be made by you to Mrs. Celine Charbonneau at (613) 957-2137. In such cases, a copy will be sent to you for delivery to the taxpayer.
We trust that these comments will be of assistance.
Yours truly,
Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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