In general, CRA can reassess tax returns for individuals, trusts and Canadian Controlled Private Corporations (CCPC’s) within 3 years from the original Notice of Assessment date. After that, the returns enter a statute barred period.
The typical statute barred period starts 3 years after the Notice of Assessment is issued
A Notice of Assessment is the original correspondence from CRA for a specific time period and tax filing indicating how much tax is owing.
For all other companies, the statute barred period begins four years from the original Notice of Assessment. For example, if a CCPC’s December 31, 2016 tax return was filed on January 31, 2017 and the Notice of Assessment was dated February 28, 2017, the tax return becomes statute barred on March 1, 2020. There are some exceptions where the statute barred period can be extended or revoked by CRA.
The following situations could extend the reassessment or statute barred period by an extra 3 years;
- A loss carry back from a later tax year is applied to an earlier tax year. Losses can be carried back three years on corporate returns.
- A non-arm’s length transaction involving the taxpayer and a non-resident affects the tax year
- A reassessment is done on another taxpayer’s taxes and affects your taxes (or corporate taxes)
The following situation would result in an unlimited reassessment period:
- The taxpayer has made a misrepresentation that is attributable to neglect, carelessness, wilful default or fraud. This does not include an honest mistake made by the taxpayer, but rather a decision made by the taxpayer to consciously exclude or misrepresent the information.
- The taxpayer filed a waiver in respect of the normal reassessment period. If CRA is requesting access to statute barred years, please seek professional advice prior to signing the waiver.
- A court has instructed CRA to reassess a statute barred period
The statute barred period for reassessments by CRA should not be confused with how long you must retain your books and records. Books and records must be kept for a minimum of six years from the end of the last tax year to which they relate (fiscal year end for corporations and December 31 for personal records).
Neglect, carelessness, wilful default or fraud will extend the statute barred period.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.
Thanks to Sophie Duncan of KWB Chartered Accountants for providing this content.