CRA reassessed Opco to deny an investment tax credit claimed for Year 1, which was permitted based on a misrepresentation attributable to negligence, etc. In addition to objecting, Opco then sought to adjust its business income for Year 1 by increasing its capital cost allowance claims to the maximum, so that its Opco's income, taxable income and Part I tax for Year 1 would be reduced to nil. In finding that such an adjustment was not permitted, the Directorate stated:
[W]e find it difficult in this case to conclude that it would be reasonable to consider that the revision to the amount of capital cost allowance claimed by Opco for Year 1 relates to the misrepresentation made by Opco in connection with the calculation of its investment tax credit deducted pursuant to subsection 127(5) in computing its Part I tax for Year 1.
In its income return filed in respect of the third taxation year ending after Year 1 ("Year 4") for which the normal reassessment period has not yet expired, Opco did not claim the maximum CCA claims available to it. Could CRA accept a request to increase the CCA claims for Year 4 so as to increase Opco's non-capital loss for Year 4, with Year 1 then being reassessed to reflect a carry-back of that loss? The Directorate responded:
[P]aragraph 10 of IC 84-1 indicates that where a taxpayer requests a revision of capital cost allowance claimed in a taxation year for which a notification that no tax is payable had been issued, such request will be allowed provided there is no change in the tax payable for the year or any other year filed, including one that is statute barred, for which the time has expired for filing a notice of objection. …[T]he CRA should not accept the adjustment request … as it would result in changes to the tax assessment for Year 1, which is a statute-barred year.