In 2015-0588971C6, CRA indicated that where there has been a voluntary disclosure for failure of the taxpayer to file T1135s for a period of years extending back more than 10 years, the current practice of CRA is to assess the $2,500 per-year penalty for the years before the 10-year period as being before the 10-year period for which CRA is permitted to waive penalties under s. 220(3.1). However, the proposition that “the late-filing penalty of $2,500 under subsection 162(7) applies automatically… is currently under study.” What is the current status of this study? CRA responded:
Having reviewed the question of the automatic application of the $2,500 late filing penalty under subsection 162(7), we are still of the opinion that it applies automatically where all the conditions of that subsection are satisfied.
Furthermore, subsection 220(3.1) does not permit the CRA to waive or cancel a penalty otherwise payable by a taxpayer for a taxation year of a taxpayer beyond the day that is 10 calendar years after the end of that taxation year.
…[A]lthough automatic, the penalty provided for under subsection 162(7) will not be assessed outside the normal reassessment period [as extended under s. 152(4)(b.2)] unless the Minister of National Revenue determines that the exception in paragraph 152(4)(a) [for neglect etc.] is applicable.