Extension of limitation periods

Did you know that the limitation periods for the Canada Revenue Agency to reassess a taxpayer could be extended by 6 months?

By order-in-council, the Government of Quebec suspended all limitation and forfeiture periods as of March 15, 2020. Thus, the time limits for reassessing and contesting before the Court tax assessments issued under provincial tax laws have been suspended. At the federal level, a bill is currently being discussed.

Limitation Period 

Under federal tax legislation, the Canada Revenue Agency (the “CRA”) may generally review a taxpayer’s returns and issue a reassessment within three years from the date of the original assessment or four years from the date of filing of the GST/HST return.

Once the limitation period has expired, the CRA generally cannot reassess unless it can demonstrate that the taxpayer has made a misstatement on the return due to carelessness, negligence or fraud.

Under the new legislation, the limitation periods would be extended for a period of six months beginning on March 13, 2020. As a result, periods otherwise expired between March 13, 2020 and September 13, 2020 would not be statute-barred until at least September 14, 2020. 

Extension of Appeal Periods

Time limits for appeals to the Tax Court of Canada and the Federal Court of Appeal would also be extended under the bill. Generally, the time limit for appealing a decision of the CRA’s Appeals Division to the Tax Court of Canada is 90 days after the decision is rendered.

The bill would suspend this appeal period for the period from March 13 to September 13, 2020, thereby extending the time to appeal. 

If you have any questions regarding your situation, we invite you to contact us.