Subsection 4 generally prevents the CRA from reassessing an income tax return for a tax year that is more than three years after the date of the original notice of assessment or of an original notification that no tax was payable for the year. When the normal three-year reassessment period for a tax year ends, the return is considered statute-barred. The request must be made within the year time limit described in An individual or graduated-rate estate can ask the CRA to redetermine certain amounts that are considered to be either payments for income tax or overpayment of income tax.
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Paragraph 4. These medical expenses may also be eligible for the refundable medical expense supplement see 70 d. For the and later tax years, relief under paragraph 1.
As of January 1, , a testamentary trust that is not a graduated-rate estate can no longer file an income tax return or ask for an adjustment for a refund or reduction in tax payable after the normal three-year limitation period has expired for the and later tax years. However, a testamentary trust can:. A testamentary trust must file the return or make the adjustment request for the applicable tax year within the year time limit described in A graduated-rate estate can only exist for up to 36 months after the death of the individual.
Therefore, a return or adjustment request must relate to a tax year that ends after December 31, , but before the end of the month period.
On March 31, , Mr. Jones died and his estate is a testamentary trust with a December 31 tax year-end. For the first tax year that ended after on December 31, , the legal representative decided to designate the estate as a graduated-rate estate, which will stop being a graduated-rate estate on April 1, As a graduated-rate estate, the estate can ask for relief for a tax year that ends in , , , or for the first period January 1, , to March 31, The estate cannot ask for relief for the second tax year that ends in for the period April 1, , to December 31, or later tax years, because the estate is a testamentary trust, and it is no longer a graduated-rate estate as of April 1, On January 31, , Mrs.
Smith died and her estate is a testamentary trust with a January 31 tax year-end.
Internal Revenue Code section 61
For the first tax year that ended after that is, January 31, , the legal representative decided to designate the estate as a graduated-rate estate, which stopped being a graduated-rate estate on February 1, As a graduated-rate estate, the estate can ask for relief for a tax year that ended in or On June 30, , Mr. Jacobs died and his estate is a testamentary trust with a December 31 tax year-end. The estate could not designate itself as a graduated-rate estate, because the month period after the individual's death ended before December 31, that is, July 1, As a testamentary trust, the estate cannot ask for relief for a tax year that ends in or later.
The estate can ask for relief for a tax year that ended in to For the and later tax years, a testamentary trust that elects to be a qualified disability trust is not eligible for relief under paragraph 1.
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As a testamentary trust, the estate can ask for relief for the tax years that ended on or before December 31, see With that provision, the minister of national revenue can reassess or redetermine beyond the normal reassessment period. The minister can do this for any taxpayer to determine a refund or to reduce Part I tax payable for statute-barred tax years that end before the day the Technical Tax Amendments Act became law on June 26, This is the case only if the requested adjustment is to apply an income tax amendment from Part 5 of the Technical Tax Amendments Act.
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A corporate taxpayer or a trust including a testamentary trust can ask for a reassessment or redetermination only if the requested adjustment relates to a legislative amendment included in Part 5 of the Technical Tax Amendments Act, for a statute-barred tax year that ended before June 26, For an individual, the statute-barred tax year may be beyond the year limitation period see 12 for subsection 4. If so, a reassessment or redetermination can only be made if that statute-barred tax year ended before June 26, , and the requested adjustment relates to a legislative amendment included in Part 5 of the Technical Tax Amendments Act, There is no time limit for a taxpayer to make a request to the CRA for an adjustment under the transitional provision.
The guidelines in Part IV and Part V of this information circular apply to these requests, as necessary. The CRA may issue a refund or reduce the amount owed if it is satisfied that such a refund or reduction would have been made if both of the following apply:. In determining whether a refund or reduction in tax payable would have been made if the return or request was filed or made on time, the CRA will consider the law in effect for the tax year. If an assessing policy changes because of a court decision, the CRA will not apply the decision on a retroactive basis to reassess a previous-year return.
This is because the CRA would not be satisfied that the taxpayer would have received a refund or reduction in tax payable had the adjustment been made on time for the return. Individuals and graduated-rate estates can make a request if they were not aware of, or missed, claiming a deduction or a non-refundable tax credit that was available for the year, such as child care expenses or the amount for an eligible dependant. Individuals can also ask for refunds or reductions of amounts owing for refundable tax credits such as provincial tax credits that have not been claimed.
Also, payroll deductions may have resulted in an overpayment of taxes for which a refund can be requested. The purpose of asking for an adjustment under subsection 4. Taxpayers should not use the minister of national revenue's authority to allow an adjustment to amounts for a statute-barred tax year as a way to have technical matters reconsidered. If the time limit to dispute an assessment has not expired, a taxpayer should file a notice of objection. For example, this could include requests for an adjustment to the allocation method that was used to determine business expenses versus personal expenses; the characterization and determination of gains and losses related to the disposition of a property; or the valuation cost assigned to the acquisition of certain capital property.
However, if the guidelines given in 71 have been satisfied, it may be appropriate to consider an adjustment in situations where the taxpayer can show that there were exceptional circumstances that prevented them from filing an objection or an appeal.
If the time limit has not expired, taxpayers should apply for an extension of time to file a notice of objection with the CRA or to file an appeal with the Tax Court of Canada. For more information, see Pamphlet P, Resolving your dispute: Objection and appeal rights under the Income Tax Act , or go to canada.
The CRA will generally not accept a request for an adjustment to a statute-barred tax year of an individual or a graduated-rate estate if the adjustment would result in the increase of taxes, interest, or penalties to the returns of other taxpayers that are statute-barred and the CRA cannot reassess them. A taxpayer included the full taxable capital gain from the sale of a rental property in his tax return. At the time of the request, the normal three-year reassessment period for the spouse's tax year has expired. The taxpayer's adjustment request for a reduction or refund in tax payable will not be accepted because the CRA cannot reassess the spouse for the tax and interest that would be payable on her share of the gain.
Individuals and graduated-rate estates, or their authorized representatives, can apply for a refund from a statute-barred tax year under paragraph 1. If the returns were filed and the refund was not issued, they can make a written request. To ask for a refund or a reduction of amounts owing under subsection 4. The request may also be made by sending a letter to the CRA with the following information:.
Individuals and graduated-rate estates, or their authorized representatives, can send completed forms or written requests for an adjustment and supporting documentation:. A corporate taxpayer can electronically submit an adjustment request with the transitional provision of subsection 4. Corporations can also make their request in writing or by sending an amended tax return in bar code format to their tax centre. Individuals and trusts including testamentary trusts can ask for an adjustment further to the transitional provision of subsection 4.
To support a claim on a return or adjustment request, individuals and graduated-rate estates should provide the information that applies to them, as follows:. If T4 information slips apply, but are not available, an individual should provide a letter from their present or former employer s , which states the individual's income and deductions for the year.
Otherwise, the individual should provide the full name and address of their present or former employer s , as well as copies of pay stubs or cancelled cheques. If other types of information slips are not available, an individual and graduated-rate estate should give the name and address of the slip issuer and the amount that would be on the slip.
If it is impossible to get the proper documentation, individuals and graduated-rate estates should send full details and a written explanation. If the CRA cannot validate a claim after referring to its records, a refund will not be issued. There may be time limits for claiming provincial and territorial benefits and credits which are administered by the CRA for provinces and territories stated in a provincial or territorial act.
For more information on provincial and territorial programs, go to canada. The CRA will not process requests for adjustments if the requested decrease in tax is the result of an increased claim for capital cost allowance or other allowable deductions, where the taxpayer originally claimed less than the maximum amount allowed.
The relief described in s 67 and 69 does not apply to refunds for overpayments of employment insurance EI premiums or Canada Pension Plan CPP contributions. The time limit to make an application for refunds of excess premiums or contributions is three and four years, respectively, under the Employment Insurance Act and the Canada Pension Plan legislation.
If a taxpayer receives a retroactive lump-sum CPP disability pension benefit, the time limit to apply for refunds for overpayments of excess contributions is 10 years from the end of the year the contributions were made. This year time limit is effective for disability pension benefit entitlement decisions made on or after September 1, For decisions made before that date, the four-year time limit in 86 applies.
Where a taxpayer has chosen not to take advantage of his or her right of objection or appeal for a tax year, requests made to reassess a statute-barred return based only on the result of an appeal by another taxpayer or by the same taxpayer will not be granted under subsection 4. For more information, see s 71 and A taxpayer who chose not to take advantage of their right to object or appeal, may know about either another taxpayer's negotiated settlement for an objection or appeal, or another taxpayer's consent to judgment for an appeal. Generally, the result of such a settlement or consent will not be extended to reassess the taxpayer's statute-barred return under subsection 4.
However, under that subsection, it may be appropriate for the CRA to reassess a return to give similar tax treatment to a taxpayer based on another taxpayer's objection or appeal. This could happen if the taxpayer shows that they intended to file a notice of objection or an appeal, but could not because of exceptional circumstances. A request for an adjustment has to be made within a reasonable time, as circumstances permit. Generally, the CRA will not reassess a statute-barred return if a request is made because of a judicial review decision for another taxpayer s whose adjustment request was referred back to the CRA for reconsideration by the court and the CRA granted that request see Requests made to get similar tax treatment based only on the result of a judicial review process for another taxpayer s will not be granted under subsection 4.
It may be appropriate for the CRA to reassess a return to give similar tax treatment to a taxpayer based on the results of a judicial review process by another taxpayer. This could happen if the taxpayer shows that they intended to make a first request; make a request for a second administrative review; or file a judicial review application or appeal, but could not because of exceptional circumstances.
The information in Part V deals with rules and procedures for interest paid on overpayments, issuing refunds, and the right of objection to an assessment or reassessment issued because of a decision made by the minister of national revenue's delegate to grant relief to a taxpayer. That information also explains the recourse taxpayers have to ask for a second administrative review from the CRA or to have the minister's delegate's decision reviewed by the Federal Court.
This recourse is available for taxpayers who do not agree with a minister's delegate's decision for denying relief or partly granting relief. Under certain circumstances, the CRA may reduce the amount of a refund to which an individual, graduated-rate estate, or testamentary trust might be entitled. For example, this may happen when a requested adjustment for a year beyond the normal reassessment period results in a refund for that year, but the adjustment would result in an increase of taxes, interest, or penalties for another year that is statute-barred.
Under these circumstances, the CRA will usually grant a refund only for the amount that exceeds the taxes, interest, and penalties that would otherwise have been paid if the other year had not been statute-barred. Refund interest is compounded daily at the prescribed rates starting on the 31st day after a written request to cancel penalty and interest; to accept a late, amended, or revoked election; or to allow an adjustment beyond the normal reassessment period was received in a manner satisfactory to the CRA.
The date on which the request was received in a manner satisfactory to the CRA is the date when the CRA has been given complete and accurate information about the request under review. In certain circumstances, refund interest may start later than the day stated in For example, refund interest may start on a later date if there was not enough documentation given to support the taxpayer's claim for an adjustment, or a new request is made for penalty and interest relief, and the new request relies on different grounds than the previous request that was denied by the CRA.
Taxpayers should satisfy the procedures described in the applicable section "Making a request. For an income tax return filed by an individual, a graduated-rate estate, or a testamentary trust, subsection 3 provides that refund interest on an overpayment will start on the 31st day after the date the return was filed. Under subsection 2 , the amount of any refund that results from an assessment made under the taxpayer relief provisions except for CCTB or CCB payments may be applied against any amount the taxpayer owes or is about to owe.