Is CRA required to issue a s. 152(1.1) Notice of Determination (thereby giving the taxpayer the right to make an objection) upon the filing of a tax return or when a taxpayer’s requested amendments to a previously filed tax return are fully denied, fully accepted, or partially accepted?
The Directorate enumerated three conditions for the application of s. 152(1.1), and focused on the following two:
1. The Minister ascertained the amount of a taxpayer’s loss for a taxation year.
2. The loss amount ascertained differs from the one reported in the taxpayer’s income tax return.
Regarding the first (“ascertained”) condition, the Directorate indicated that the previous CRA interpretation (e.g., in 2011-0401241I7) “that no ascertainment occurs when the change is requested by the taxpayer is not supportable.” It further indicated:
[W]here a taxpayer’s requested amendment is fully reflected (or accepted by the Minister), the Minister will not be considered to have ascertained a different loss amount from the taxpayer.
Regarding the second condition, it stated:
[I]f a taxpayer requests an amendment that will result in a loss that is not reported on its return for the year as filed, and the CRA fully rejects that request, no Notice of Determination can be issued as the amount ascertained by the Minister does not differ from the amount reported by the taxpayer in their return (the original return). Similarly, if such a request is fully agreed to by the CRA, no Notice of Determination can be issued as the amount ascertained by the Minister agrees with the amount reported by the taxpayer in their return (the amended return). However, if such a request is partially agreed to by the CRA, then a Notice of Determination can be issued if the taxpayer requests one as the amount ascertained by the Minister differs from the amount reported by the taxpayer in the filed return.