Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Explanation of self-assessing system
Position: n/a
Reasons: Complaint about subsequent reassessment and time it took.
DM'S OFFICE (2) # 97-03007M
ASSOCIATE DEPUTY MINISTER (1) # 97-02908M
ADM'S OFFICE (2)
PENDING
RETURN TO INCOME TAX RULINGS
AND INTERPRETATIONS DIRECTORATE
15TH FLOOR, ALBION TOWER
Signed on July 4, 1997
XXXXXXXXXX
Dear XXXXXXXXXX:
I am responding to your letter addressed to the Honourable Paul Martin, Minister of Finance, concerning the administration of the Income Tax Act. Copies of your letter were sent to the Honourable Jane Stewart, former Minister of National Revenue, by Mr. Martin on April 22, 1997, and by XXXXXXXXXX on April 15, 1997.
I would like to explain that Canada's system of taxation is one of self-assessment where taxpayers volunteer the facts about their income and calculate taxes payable. During the initial assessment, income tax returns are processed with a minimum of verification in order to expedite the issuance of a Notice of Assessment. However, in order to maintain public confidence in the integrity of the income tax system, it is Revenue Canada's responsibility to ensure that all income, deductions and credits claimed by an individual are accurately reported and substantiated. Therefore, individual income tax returns may be subject to a routine review to ensure that they have been properly assessed. In some cases, this review will result in a reassessment after the return has been assessed. In addition, the Department advises all taxpayers on its Notices of Assessment that the particular return is subject to verification for a three year period. In instances where there is evidence of fraud or misrepresentation of taxable income, returns can be reassessed within seven years of the initial assessment. If additional income is added to a previously assessed income tax return, interest will accrue on the resultant additional taxes from the original due date of the particular return.
While Revenue Canada dedicates significant resources to providing taxpayers with assistance in interpreting tax legislation, the Department does not pre-approve or sanction specific financial investments. Taxpayers have the responsibility to determine for themselves how the tax laws apply to financial transactions that they undertake.
I trust that my comments have addressed your concerns.
Yours sincerely,
Rob Wright
M. Sarazin
957-2131
971161
June 3, 1997