| DATE: August 29, 1989 | |
| VANCOUVER DISTRICT OFFICE | Technical |
| ATTN: Paul E. Seguin | Interpretations Division |
| Director-Taxation | D. Lanos |
| (613) 957-9231 |
Subject: 19(1)
This is further to our memorandum of February 15, 1989, and your reply of April 14, 1989.
In our view, the issues in this case boil down to three:
(1) whether the taxpayer's amended 1982 and 1983 returns can be accepted as filed on a timely basis;
(2) determination of the legitimacy of the business losses claimed; and
(3) the treatment of losses claimed on a consistent basis.
Resolution of these issues in accordance with departmental practices under the ITA (if possible) is preferable to resolution through the lengthy remission process (if warranted). Replies to representations made on the taxpayer's behalf cannot reflect a treatment less favourable than that available to any other taxpayer in our administration of the Act.
In applying these principles, we have the following suggestions:
(1) The standing rule in TOM 40(10)5.21(3)(B)(a)2 permits the Department to accept the as yet unprocessed amended 1982 and 1983 Returns (deadline December 31, 1986) postmarked January 2, 1987, as filed on time for subsection 164(1) refund purposes.
(2) Since the amended 1982 and 1983 returns were filed well within the paragraph 152(4)(c) reassessing deadline, TOM 13(152)2.1(3) grants the Chief of Audit the discretion to accept their filing as deemed waivers for purposes of issuing reassessments in respect of the adjustments listed on Schedule A attached.
(3) 24(1)
If the above suggestions are acted upon, the reassessments under (2) and will give the taxpayer the opportunity to have the major issue 24(1).
I understand that Don Lanos of this Division has discussed the above recently with Ken Stobbs of your Audit Division. I have also discussed this case briefly with Stan McKenzie on August 23, 1989.
I am returning 19(1) returns for 1981, for 1982 and 1983 (the "152(7)" versions and amended returns dated December 31, 1986 and September 5, 1987) and for 1984 and 1985, as well as your working papers to assist in your further review.
A.G. Cockell DirectorTechnical Interpretations Division Legislative and Intergovernmental Affairs Branch
Encl. Schedule A T1 ReturnsWorking Papers