- For individuals, most trusts and CCPCs, the normal reassessment period ends three years after the earlier of the date of the original notice of assessment and the date of the original notification that no tax is payable.
- After that period, the CRA can reassess only if an exception applies, such as misrepresentation, fraud or a valid waiver.
- Where a late reassessment relies on misrepresentation, fraud or a waiver, it is limited to the matter that triggered the exception.
You have been reassessed, the audit seems finished, and you want to know whether the year is truly closed. The short answer is that the law sets a time limit on reassessing, but it has exceptions.
This article walks through the normal period, the main exceptions, and what protects you. It is general information, and a lawyer or accountant can apply it to your dates and facts.
This article covers Canadian federal tax law, which applies in every province.
The normal reassessment period
Under subsection 152(3.1) of the Income Tax Act, the normal reassessment period for individuals, trusts other than mutual fund trusts, and Canadian-controlled private corporations ends three years after the earlier of the date of the original notice of assessment and the date of the original notification that no tax is payable.
Mutual fund trusts and corporations other than Canadian-controlled private corporations have a four-year normal reassessment period.
Under subsection 152(4), tax, interest or penalties cannot be assessed after that period unless a listed exception applies. How the rules apply inside the period after an earlier review is finished depends on your situation, so it is worth confirming with a lawyer.
Exceptions that allow a later reassessment
| Exception | What it means |
|---|---|
| Misrepresentation or fraud | The CRA may reassess if you made a misrepresentation attributable to neglect, carelessness or wilful default, or committed fraud, and there is no fixed time limit |
| Valid waiver | A waiver filed within the normal period lets the CRA reassess later, only for the matters it specifies |
| Extended period | The normal period is extended by three years for items listed in subsection 152(6), such as certain loss and investment tax credit carrybacks |
| Taxpayer relief request | The CRA may reassess to the extent of a request, which under subsection 152(4.2) must be made within 10 years of the end of the relevant calendar year |
The CRA generally does not use the misrepresentation exception to reduce tax payable.
Limits that protect you
A reassessment after the normal period under the misrepresentation, fraud or waiver exceptions is allowed only to the extent it can reasonably be regarded as relating to the matter that triggered the exception. So a late reassessment does not reopen everything.
In an appeal of an assessment made after the normal period, the burden of establishing misrepresentation lies on the CRA, which must show at least one misrepresentation that a normally wise and cautious taxpayer would not have made, even if made in good faith. Once the right to reassess is established, the onus shifts to you on the amount.
A waiver limits the Minister's power to reassess to the matters specified in it or reasonably related to them. A waiver can be revoked on Form T652, with the revocation taking effect six months after the notice is filed, and it cannot be rescinded once filed. A waiver included in the return when it is originally filed is not valid.
Does the CRA have to accept what you filed?
No. Under subsection 152(7), the Minister is not bound by a return or information supplied by or on behalf of a taxpayer, and may assess tax payable even if no return was filed or the information was inaccurate. That is why the time limit matters.
If you disagree with a reassessment, a notice of objection starts the review, and the Minister must reconsider and vacate, confirm or vary the assessment, or reassess.
What to do next
- Find the date of your original notice of assessment and work out which period applies to you.
- Check whether you signed a waiver, and what matters it names.
- Keep your books and records, since they generally must be kept for a minimum of six years.
- Before signing any waiver, ask a lawyer or accountant to confirm its scope. The CRA's own manual says a waiver should be as specific as possible.
- If a late reassessment arrives, check the date and the exception the CRA relies on, then seek advice quickly.
Frequently asked questions
Is a year closed once the CRA finishes an audit?
Not necessarily. The year stays open to reassessment until the normal period ends, which is three years after the original notice for most individuals. After that, a listed exception must apply.
Can the CRA reassess me after the normal period?
Yes, but only if an exception applies, such as misrepresentation, fraud, a valid waiver, an extended period or a relief request. The reassessment is limited to the matter that triggered the exception in the misrepresentation, fraud and waiver cases.
Should I sign a waiver if the CRA asks?
Get advice first. A waiver limits the Minister's power to the matters it specifies or reasonably related ones, and the CRA's manual says it should be as specific as possible. A waiver can be revoked on Form T652, effective six months after filing.
What if I think a late reassessment is wrong?
You can serve a notice of objection within the deadline in subsection 165(1). In an appeal of an assessment made after the normal period, the CRA bears the burden of establishing misrepresentation.
Sources
- CRA Information Circular IC75-7R3, Reassessment of a Return of Income — canada.ca
- Income Tax Act, s. 152 — Justice Laws (federal)
- CRA Income Tax Audit Manual, chapter 11 — canada.ca
- CRA RC4188, What you should know about audits — canada.ca
- Income Tax Act, s. 165(1) — Justice Laws (federal)
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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