2015-0614161I7 Extended reassessment period 152(4)(b)

Principal Issues: What is the last day to issue a reassessment under paragraph 152 (4)(b) of the Income Tax Act for a taxpayer who is a Canadian controlled private corporation.

Position: The reassessment must be issued before the day that is 3 years after the end of the normal reassessment period. In the example provided, where the original notice of assessment is issued December 31, 2013, the last day to issue a notice of reassessment under paragraph 152(4)(b) is December 31, 2019.

Reasons: Section 27 of the Interpretation Act.

Author: Godson, Gillian
Section: 152(4)(b), section 27 of the Interpretation Act

                                                                                                             March 10, 2016
 

      Assessment, Benefits and Services Branch                                  HEADQUARTERS
      T2 Strategy and Coordination Section                                           Income Tax Rulings
                                                                                                             Directorate
      Attention:  David Horan-Hutt                                                          G. Godson

                                                                                                             2015-061416

      Extended reassessment period 152(4)(b)

We are writing in reply to your inquiry of October 20, 2015, wherein you requested confirmation of the last day to issue a reassessment under paragraph 152(4)(b) of the Income Tax Act (the “Act”).

In an example you provided, a Canadian-controlled private corporation was issued an original notice of assessment for a particular taxation year on December 31, 2013. In your view, the last day to issue a reassessment to the corporation under paragraph 152(4)(b) of the Act is December 31, 2019.

Our comments

In general, subsection 152(4) of the Act provides that for a particular taxation year, the Minister may, at any time, issue an assessment, reassessment or additional assessment of tax or notify a taxpayer that no tax is payable. However, assessments, reassessments, or additional assessments of tax, interest or penalties for a taxation year cannot be issued by the Minister after the “normal reassessment period” in respect of the year unless the circumstances described in paragraphs 152(4)(a) or (b) of the Act apply. 

The “normal reassessment period” is defined in subsection 152(3.1) of the Act. In particular, paragraph 152(3.1)(b) of the Act provides that the normal reassessment period for a Canadian-controlled corporation is three years after the day of sending the notice of an original assessment or an original notification that no tax is payable by the taxpayer for the year. In this regard, subsection 27(3) of the Interpretation Act states that where a time is expressed to begin or end at, on or with a specified day, or to continue to or until a specified day, the time includes that day. Accordingly, under paragraph 152(3.1)(b) of the Act, where an original assessment is issued on December 31, 2013, the normal reassessment period ends on December 31, 2016 (i.e., 3 years after that date). The courts confirmed this in Brunette, [2001] 1 C.T.C. 2008 (TCC).

Paragraph 152(4)(b) of the Act provides that an assessment, reassessment or additional assessment may be made after the taxpayer’s normal reassessment period in respect of the taxation year only if the assessment, reassessment or additional assessment is made before the day that is 3 years after the end of the normal reassessment period for the taxpayer in respect of the year (the “extended reassessment period”).

In this regard, subsection 27(4) of the Interpretation Act states that “where a time is expressed to begin after or to be from a specified day, the time does not include that day”. In your example, it is our view that the extended reassessment period begins on the day after the end of the normal reassessment period – January, 1, 2017. Therefore in your example, pursuant to paragraph 152(4)(b) of the Act, the assessment, reassessment or additional assessment must be made before January 1, 2020.

Accordingly, we agree with your view that, in your example, the last day to issue an assessment, reassessment or additional assessment under paragraph 152(4)(b) of the Act is December 31, 2019.

We trust these comments will be of assistance.

Bob Naufal
Manager
Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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