Principal Issues: Circumstances where an amended tax return will be accepted.
Position: Reference to IC-75-7R3.
Reason: See below
9 OCTOBER 2015 FEDERAL TAX ROUNDTABLE
2015 APFF CONFERENCE
Question 25 Failure to deduct taxable dividend
A corporation ("Holdco") holds all of the shares of the capital stock of another corporation ("Opco"). Holdco and Opco are both CCPCs. In 2013, Opco paid a dividend of $100,000 to Holdco. The dividend received by Holdco was deductible in accordance with subsection 112(1). Holdco included the dividend for income tax purposes but erroneously failed to claim a deduction under subsection 112(1).
Questions to the CRA
Is there an administrative measure allowing Holdco to amend its tax return for the year 2013 if the period for filing a notice of objection for 2013 has expired?
What are the situations in which the CRA will agree to process an amended return to correct an error in situations where the period for filing a notice of objection has expired?
CRA Response
Information Circular 75-7R3 [footnote 1) provides the circumstances in which the CRA will make a reassessment for a reduction in tax payable. Paragraph 4 of the Information Circular states that the CRA, on the receipt of a written request of the taxpayer, will ordinarily reassess to give a refund, even if a Notice of Objection has not been made within the specified period, provided that the conditions in paragraphs (a) to (e) are satisfied, including in particular:
- The taxpayer has filed the income tax return within the period of three years stipulated in subsection 164(1);
- The CRA is convinced that the previous assessment or reassessment was wrong; and
- It is possible to make the reassessment within the period of three years or, if it is not possible to satisfy this condition, the taxpayer has provided a waiver in the prescribed form on a timely basis.
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 CANADA REVENUE AGENCY, Information Circular 75-7R3 (archived), Reassessment of a Return of Income, July 9, 1984.
Marc Séguin
2015-059832
October 9, 2015