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Tax Alert: September 14, 2020

2020-09-14


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:

Time Limit / Period
Deadline Extension 
​Reassessment period / statute-barred date 
​For taxation years that would have otherwise become statute-barred between May 20, 2020 and December 30, 2020, the statute-barred date is extended for a maximum of six months but not beyond December 31, 2020.

For example, if a Canadian-controlled private corporation's 2016 tax return was originally assessed on June 15, 2017, generally the CRA would not be able to issue a reassessment after June 15, 2020 As a result of the CRA's ministerial orders, the CRA will have until December 15, 2020 to make a reassessment.

Requests for extensions of time to file a Notice of Objection
Taxpayers whose deadline to request an extension to file a Notice of Objection expired between March 13, 2020 and December 30, 2020, will have up to six additional months, but not beyond December 31, 2020, to make their request.
Application to the Tax Court of Canada (TCC) for extension to object to a (re)assessment
Taxpayers  whose deadline to apply to the TCC for an extension to object expired between March 13, 2020 and December 30, 2020, will have up to six additional months, but not beyond December 31, 2020, to make their request.  
GST / HST 
This also applies to time limits on assessments of GST / HST returns and of certain amounts of GST / HST payable, penalties, rebates or interest that would otherwise become statute-barred between May 20, 2020 and December 30, 2020. 
Filing deadline for certain Scientific Research and Experimental Development (SR&ED) prescribed forms
If taxpayers wish to apply for the SR&ED program, they must file required information using prescribed forms.  To the extent that these forms were due between March 13, 2020 and December 30, 2020, the deadline for these forms has generally been extended for a maximum of six months, but not beyond December 31, 2020.

Please note the time limit for filing a Notice of Objection has not been extended and remains the later 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.