The amended version of s. 163(1) applies to penalties assessed for the 2015 and subsequent taxation years. To what extent is CRA exercising its discretion over penalty assessments applicable to the 2014 years and prior to reduce penalties to the limits contained in revised s. 163(1)? CRA responded:
[T]he CRA will not cancel or reduce a previously assessed repeated failure to report income penalty based on the fact that the calculation of the penalty under existing law is greater than the amount that would be assessed under proposed legislation. …
[Thus] the penalties assessed for tax years prior to 2015 will not be reduced automatically or by making a taxpayer relief request to the CRA. …[T] he CRA will generally exercise the discretion under subsection 220(3.1), where the circumstances substantiate the taxpayer’s inability to satisfy the particular tax obligation or requirement under the Act.
