Tax Alert: September 14, 2020

The Canada Revenue Agency (CRA) was given temporary authority to extend certain deadlines imposed under the Income Tax Act and Excise Tax Act. The period of extension is a maximum of six months, beginning as early as March 13, 2020, and ending no later than December 31, 2020. 

Statute Barred

This impacts taxpayers whose tax filings would otherwise be statute-barred after May 20, 2020 and may also impact certain requests for extensions to file objections. “Statute-barred” generally refers to the time limit for the Minister of National Revenue to make an assessment, reassessment or additional assessment.

The following table summarizes the temporary changes:

Please note the time limit for filing a Notice of Objection has not been extended and remains the latter of one year after the tax filing deadline for the return or 90 days from the date of the Notice of Assessment.

What Does This Mean for You and Your Business?

Since the onset of COVID-19, many Canadians, businesses and other organizations, including the CRA, have been unable to meet deadlines imposed under normal legislation. These changes allow for certain time limits to be extended, sometimes with retroactive effect, to mitigate unintended consequences resulting from the pandemic. The effect of these extensions is varied. Some of these extensions will allow taxpayers to pursue relief and programs that they might have otherwise missed. Other extensions will allow the CRA to pursue reassessments of taxpayers in years taxpayers thought perhaps were statute-barred. 

It is important for taxpayers to be aware of these possibilities and how they could affect their specific circumstances - whether it is because a taxpayer thought perhaps an audit was over and there is now extra time for the CRA to process an increase in tax or because a taxpayer thought they were out of time to request a reassessment to reduce their tax payable.