What is the CRA Reassessment Period?
The CRA Reassessment Period is the amount of time the Canada Revenue Agency is allowed to adjust a personal, corporate, GST/HST, or payroll return. Each of these returns have different CRA Reassessment Periods, and the Canada Revenue Agency may even extend the CRA Reassessment Period in certain circumstances.
Personal Taxes and the CRA Reassessment Period
Generally, the Canada Revenue Agency, sometimes referred to as the Minister, cannot reassess a taxation year (tax return from that specific year) after the normal reassessment period of three years has passed. The CRA Reassessment Period is the period after the date of the notice of assessment within which the CRA may reassess a taxpayer’s tax return.
A tax year is considered as statute barred three full years after the date of the original notice of assessment issued from the CRA, and not your reassessment dates.
As mentioned above, once a taxpayer files their tax return, they should receive a notice of assessment. The date of the taxpayer’s notice of assessment is important to track because the Canada Revenue Agency (the “CRA”) can reassess a tax return at any time for three years from the date on the notice of assessment.
The CRA Reassessment Period may be extended if the taxpayer has committed fraud or there was a misrepresentation on the tax return. If this is the situation, the CRA can review tax returns as far back as they choose to suffice their requirements.
Also, the taxpayer may sign a waiver which allows the CRA to ignore the CRA Reassessment Period and audit beyond the general three-year limit. If a waiver is requested by the CRA, you should consult a professional before signing. You may be able to make the waiver specific to particular issues or focus the waiver on something else.
It is important for you to note that the CRA needs to complete an audit within the three-year period, not just start the audit.
Corporate Taxes and the CRA Reassessment Period
The normal reassessment period for a T2 (corporate) tax return depends on whether or not the corporation was a Canadian-controlled private corporation (CCPC) at the end of the tax year.
The CRA can usually reassess a return for a tax year:
- Within three years of the date they sent the original notice of assessment for the tax year, if the corporation was a CCPC at the end of the year; or
- Within four years of the date they sent the original notice of assessment for the tax year if the corporation was not a CCPC at the end of the year.
The normal CRA Reassessment Period can be extended for an extra three years for any of the following reasons:
- You want to carry back a loss or credit from a later tax year;
- A non-arm’s length transaction involving the corporation and a non-resident affects the corporation’s tax;
- The corporation pays an amount or receives a refund of foreign income or profits tax;
- A reassessment of another taxpayer’s tax for any of the above reasons affects the corporation’s tax;
- A reassessment of another tax year (it must be a prior tax year if the reassessment relates to the loss or credit carryback) for any of the above reasons affects the corporation’s tax;
- The reassessment results from a non-resident corporation’s allocation of revenue or expense for the Canadian business, or from a notional transaction, such a “branch advance”, between the non-resident corporation and its Canadian business or
- To give effect to the application of the non-resident trust rules in section 94 or to the application of the foreign investment rules under sections 94.1 and 94.2.
If the reassessment results from a provincial income reallocation, the normal CRA Reassessment Period can be extended for one year from the later of:
- The day on which the CRA is advised of the provincial reassessment; or
- 90 days after the notice of the provincial reassessment was sent.
If the CRA is trying to issue a notice of reassessment to you, outside of the allowed CRA Reassessment Period, you should contact Rosen Kirshen Tax Law today. We have experience fighting for you, and your rights. Don’t let the Canada Revenue Agency walk all over you. Call us to learn more.
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.