A particular taxation year could be reassessed, to reduce a loss incurred for that year, until the day that is 3 years after the expiration of the "normal reassessment period" applicable to that year in accordance with s. 152(4)(b)(i). However, would CRA remain able to reassess the prior taxation year in which the loss was deducted where that prior year is outside the extended reassessment period under s. 152(4)(b)(i)? The Directorate responded negatively:
[T]he CRA may … reassess the particular taxation year (the taxation year in which a loss was incurred) only to the extent that the reassessment is made before the normal reassessment period for the particular taxation year expires. … The extended reassessment period under subparagraph 152(4)(b)(i) applies only to an assessment or reassessment made under subsection 152(6) of a taxation year for which, for example, a deduction under section 111 in respect of a loss incurred for a subsequent taxation year is claimed. The CRA also has no authority under the Act to reassess after the day that is after the end of the extended reassessment period under paragraph 152(4)(b) for a taxation year in which a loss carryback was made to reduce the amount of the section 111 deduction claimed in respect of a loss incurred in a previous year.