May 2016 Alberta CPA Roundtable, Q.17

Respecting whether a s. 162(7) penalty for failure to file a T1135 can be assessed beyond the normal reassessment period, CRA stated that although such failure to file was a misrepresentation, in order to establish carelessness, it would be necessary to establish that the failure:

was an error that a prudent and conscientious person would not have made.

CRA stated that in the context of a voluntary disclosure respecting failure to file T1135s, “the taxpayer would have to complete the T1135 for all years for which such filing was required.”

CRA acknowledges that assessing a s. 162(7) penalty for failure to file T1135s for periods before the normal reassessment period (as potentially extended by three years under s. 152(4)(b.2)) would require CRA to demonstrate that such failure “was an error that a prudent and conscientious person would not have made,” and then stated that in order for failure to file T1135s to be exonerated under the voluntary disclosure program, “the taxpayer would have to complete the T1135 for all years for which such filing was required.”