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: 1. Can the taxpayer be reassessed and is the individual taxpayer entitled to receive a refund from the reassessment?
2. Does subsection 152(4.2) and/or paragraph 164(1.5)(b) of the Act apply to the particular situation?
Position: 1. Yes.
2. No.
Reasons: 1. The request for reassessment was within the normal reassessment period and therefore, the reassessment could be made in accordance with subsection 152(4). Paragraph 164(1.5)(a) allows the Minister to issue the refund because the taxpayer's original return of income was filed within 10 calendar years after the end of the taxation year in respect of which the refund is sought.
2. Subsection 152(4.2) only applies "at any time after the end of the normal reassessment period" and the request for reassessment was made within the normal reassessment period. Therefore, subsection 152(4.2) and paragraph 164(1.5)(b) of the Act would not apply to the particular situation.
February 1, 2012
Canada Revenue Agency HEADQUARTERS
Assessment and Benefit Services Branch Income Tax Rulings
Individual Returns Directorate Directorate
T1/T3 Accounting Enquiries Section M. Gauthier
25 McArthur Ave, 8th Floor, Tower C (613) 948-1143
Vanier, ON, K1A 0L5 2011-042210
Attention: Valorie Bunce
Late refund of overpayment
We are writing in response to your email of September 14, 2011 requesting a confirmation of an interpretation originally given by email to the Jonquiere Tax Centre on September 8, 2011. The request involves the interpretation of the reassessment and refund provisions found in the Income Tax Act (the "Act") in the following situation.
An individual taxpayer filed his 1999 return of income (the "Original Return") on April 14, 2009. The initial assessment of the Original Return was issued to the taxpayer on May 7, 2009 and resulted in tax payable. On May 2, 2011, the individual requested an amendment to his Original Return which would result in an overpayment of tax.
You have requested a confirmation as to whether the taxpayer can be reassessed and receive a refund from the reassessment. You also wonder if subsection 152(4.2) and/or paragraph 164(1.5)(b) of the Act apply to the particular situation.
The normal reassessment period for an individual taxpayer in respect of a taxation year is defined in paragraph 152(3.1)(b) of the Act as the period that ends three years after the earlier of the day of sending of a notice of an original assessment and the day of sending of an original notification that no tax is payable by the taxpayer for the year. The individual taxpayer was initially assessed on May 7, 2009 and therefore, the normal reassessment period would end on May 7, 2012. Since the request for reassessment was made on May 2, 2011, it would be within the normal reassessment period and the reassessment could be made in accordance with 152(4) of the Act.
Subsection 164(1) of the Act generally provides that no refund of tax will be issued where the taxpayer's return of income for a taxation year has not been made within three years from the end of the year. In the situation described above, subsection 164(1) of the Act would not allow for the refund to be issued to the taxpayer because the original return of income was not filed within 3 years from the end of the taxation year.
However, paragraph 164(1.5)(a) of the Act gives the Minister the discretion to refund an overpayment of tax to an individual or to a testamentary trust outside the three year limitation period in subsection 164(1) provided the return is filed within ten years after the end of the taxation year in respect of which the refund is sought. Therefore, paragraph 164(1.5)(a) would allow the CRA to issue the refund because the Original Return of income was filed within ten calendar years after the end of the taxation year.
Finally, paragraph 164(1.5)(b) of the Act gives the Minister the discretion to refund an overpayment of tax where an assessment or a redetermination was made under subsection 152(4.2) or 220(3.1) or (3.4) in respect of the taxpayer. Subsection 152(4.2) applies "at any time after the end of the normal reassessment period of a taxpayer who is an individual". As indicated above, the request for reassessment was made within the normal reassessment period under subsection 152(4), not subsection 152(4.2). Therefore, subsection 152(4.2) and paragraph 164(1.5)(b) of the Act do not apply to the particular situation.
If you have any questions regarding the above, please do not hesitate to contact Michel Gauthier at (613) 948-1143.
Guy Goulet CA, M. Fisc.
Manager
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
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