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Rules around reassessment by the CRA

Once you receive the notice of assessment for your tax return, the CRA can reassess you up to three years from date of the original notice.

There are some exceptions to the three-year rule you should be aware of.

  • If you have made a misrepresentation attributable to “neglect, carelessness or wilful default”, you can be reassessed at any time.If you go to court, the onus is on the CRA to prove that there has been neglect, carelessness or wilful default on your part. Note, that the term carelessness is quite broad and there is extensive case law interpreting the meaning of these words.
  • If you’re involved in a tax shelter where you are required to file a tax shelter information form with CRA, and you don’t comply, you can be reassessed at any time.
  • If you own foreign property with a total value of more than $100,000, and you don’t properly report all of it on form T 1135 with the level of detail the form requires, and if you have unreported foreign income, you can be reassessed up to six years from the original assessment date.
  • If you wish to carry back a loss, which generally can be done for any of the three years preceding the loss, your return will have to be reassessed to allow this. A reassessment resulting from many carry-back provisions can be done up to six years from the original assessment date. Keep in mind, this is one instance where being reassessed works to your benefit.

There are many other exceptions, and the message is clear that you must be careful completing your return. Don’t rely too heavily on the three-year assessment expiring.

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