25 July 2024 External T.I. 2024-1013061E5 - Subsection 225.1(1) to a CERS excess refund

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: Whether the collection of an amount payable reflected on an assessment issued under subsection 160.1(3) for a recovery of an excess refund of a deemed overpayment of a Canada Emergency Rental Subsidy (or CERS) calculated under subsection 125.7(2.1) can be delayed under section 225.1 of the Act.

Position: Generally, yes, subject to exceptions.

Reasons: The recovery of an excess refund of a CERS deemed overpayment that is assessed under subsection 160.1(3) is an amount assessed under the Act. The grace period of collection that is available under subsection 225.1(1) or (2) would generally be available to a taxpayer that has been assessed an amount under subsection 160.1(3), up until 90 days after the notice of the assessment has been sent to the taxpayer. However, the exceptions for large corporations, as noted in subsection 225.1(7), or for collections that are considered in jeopardy, as noted in subsection 225.2(2), must be considered.

XXXXXXXXXX. 								2024-101306
										Julia Clarkson

July 25, 2024

Dear XXXXXXXXXX:

Re: Application of collection restrictions - excess refund of Canada Emergency Rent Subsidy (CERS benefit)

Unless stated otherwise, all statutory references in this document are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.) (the Act), as amended to the date hereof.

We are writing in reply to your enquiry of March 26, 2024 in which you requested our views on whether the collection restrictions provided by subsection 225.1(1) apply to delay the collection of an amount payable as a result of an assessment under subsection 160.1(3) of a recovery of an excess deemed overpayment under subsection 125.7(2.1) (CERS benefit).

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

Our comments

An assessment of an excess refund of a CERS benefit under subsection 160.1(3) may be made at any time, either concurrently with a redetermination of that benefit under subsection 152(3.4) or in the absence of such a redetermination. An excess refund assessed under subsection 160.1(3) represents an amount assessed under the Act that is deemed payable under subsection 160.1(1) on the date of the payment of that refund. In addition, once a notice of that assessment is sent to a taxpayer section 158 stipulates that the amount is an amount payable under the Act. Therefore, the assessed amount payable would be subject to the collection procedures under the Act.

The collection procedures listed in subsection 225.1(1) that could be applied to an assessed recovery of the excess CERS refund would generally be delayed under paragraph 225.1(1.1)(c) until 90 days after the day on which the notice of assessment reporting the taxpayer’s liability was sent to the taxpayer.

If a taxpayer has objected to an amount assessed under subsection 160.1(3), the collection procedures provided by subsection 225.1(1) would generally be delayed by subsection 225.1(2) until 90 days after the day on which the Minister sends a notice confirming or varying the assessment.

However, the delay in collection procedures authorized under subsections 225.1(1) and (2) will not apply in certain circumstances.

For example, if the taxpayer is a large corporation, as defined in subsection 225.1(8), subsection 225.1(7) authorizes the Minister to collect

“(a) at any time on or before the particular day that is 90 days after the day of the sending of the notice of assessment, ½ of the amount so assessed; and

(b) at any time after the particular day, the amount, if any, by which the amount so assessed exceeds the total of

(i) all amounts collected before that time with respect to the assessment, and

(ii) ½ of the amount in controversy at that time.”

It is also possible that the Minister would be able to collect the assessed amount under subsection 225.2(2) if collection of the assessed amount was considered to be in jeopardy due to a delay. Subsection 225.2(2) states:

“Notwithstanding section 225.1, where, on ex parte application by the Minister, a judge is satisfied that there are reasonable grounds to believe that the collection of all or any part of an amount assessed in respect of a taxpayer would be jeopardized by a delay in the collection of that amount, the judge shall, on such terms as the judge considers reasonable in the circumstances, authorize the Minister to take forthwith any of the actions described in paragraphs 225.1(1)(a) to (g) with respect to the amount.”

We hope that these comments have been of assistance.

Yours truly,

Gillian Godson
Section Chief, Administrative Law Section I
Specialty Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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