The Corporation initially had its loss denied for Year 1 but, many years later in Year 1 + X, CRA allowed that loss (“Determined Amount #2”). Can the Corporation carryforward the Year 1 loss (Determined Amount #2) to Year 1 + 2 (i.e., well prior to Year 1 + X) - even though the normal reassessment period for Year 1 + 2 has expired - in reliance on s. 152(4.3)?
In responding affirmatively, CRA stated:
[I]t is reasonable to consider that the reassessment of tax payable by the Corporation for Year 1+2 to be in respect of the change in a "balance", as defined in subsection 152(4.4), applicable to the Corporation for Year 1 (i.e., the Corporation's loss for Year 1), since the said reassessment is required to be made in order to allow for the carryforward of the Determination Amount #2 for Year 1 to Year 1+2, pursuant to paragraph 111(1)(a)
Therefore, the CRA should reassess the tax payable by the Corporation for Year 1+2, pursuant to subsection 152(4.3), as requested, in order to grant the carryforward of the Determined Amount #2 for Year 1 to Year 1+2, under paragraph 111(1)(a), provided that the reassessment for Year 1+2 is made before the end of the day that is one year after the day on which all rights of objection and appeal expire or are determined in respect of Year 1.