Parliament did not require the correction of subsequently-discovered errors in a return

It can be inferred that Parliament did not intend to impose an obligation to correct a subsequently discovered error in an income tax or GST/HST return given that it could have specified, and chose not to – see, for example:

• S. 32.2 of the Customs Act (requiring an importer who discovers a past error in reporting an importation to correct it); and
• Reg. 8401(6) (requiring the correction and reissuance of a T4 if a pension adjustment is altered for certain reasons, and there is a change in the amount of employment income previously reported).

It is suggested that it follows that a failure to correct such a subsequently discovered error is not a criminal offence (e.g., under ITA s. 239(1)(d), making it an offence to wilfully evade payment of taxes), and it should not trigger penalties that did not already apply at the time of filing. Such failure also is not a ground to permit the CRA to reassess beyond the normal reassessment deadline if the original filing had not constituted a misrepresentation attributable to carelessness or neglect (see ITA s. 152(4)(a)(i) and ETA s. 298(4)).

There remains the question of whether a lawyer or CPA would be in violation of any professional conduct rules by not addressing a subsequently discovered error, but it would seem that if the client is not obligated to act, nor should the advisor. Also note, for example, that an Ontario lawyer “must endeavor to obtain for the client the benefit of every remedy and defence authorized by law” under the Law Society of Ontario, Rules of Professional Conduct, Commentary to Rule 5.1-1.

Neal Armstrong. Summary of David Sherman and Balaji Katlai, “Is a taxpayer required to correct a past error?” Tax for the Owner-Manager, Vol. 20, No. 2, April 2020, p. 1 under s. 239(1)(d).