From: AlanBaggett@volcanomail.com   
      
   Not over till the tax judge says so :CRA SOTW    
      
      
   Reassessment window open three years   
   Jamie Golombek, Financial Post     
      
   You've filed your 2008 tax return, hopefully, so you've done your part. The   
   next step is in the hands of the tax man.   
      
   In most cases your return will be processed by the Canada Revenue Agency "as   
   filed," and you will receive, generally within 10 days, a Notice of Assessment.   
      
   The assessment will confirm your 2008 income, the tax that was payable last   
   year (if applicable), any refund due or amount owing, as well as some useful   
   carry-forward information, such as your RRSP contribution room for 2009 or   
   capital losses available    
   for use in future years.   
      
   But the Notice of Assessment also serves a more statutory purpose: It   
   officially begins the reassessment period.   
      
   Under the Income Tax Act, the government has three years from the mailing date   
   printed on your Notice of Assessment to come back and reassess you.   
      
   For example, let's say you filed your 2008 return 10 days ago using the CRA's   
   electronic NETFILE system. If your 2008 Notice of Assessment was mailed out on   
   May 1, 2009, the CRA has until May 1, 2012 to reassess you.   
      
   What if the CRA never mails you a Notice of Assessment? Or what if they do   
   mail it, but you never received it? Those two questions were the subject of a   
   recent Federal Court of Appeal tax case.   
      
   In 2002,William Gray withdrew funds from his RRSP, which were not reported as   
   income on his 2002 tax return.   
      
   In February, 2006, the CRA reassessed Mr. Gray for the tax owing on this   
   unreported RRSP income. Mr. Gray objected, saying that the reassessment, dated   
   Feb. 24, 2006, was not issued within the normal reassessment period set out in   
   the Act and thus was    
   invalid.   
      
   The CRA argued that an original assessment, which accepted Mr. Gray's return   
   "as filed," and did not include the non-reported RRSP income, was mailed on   
   June 5, 2003. Mr. Gray maintained he never received it.   
      
   The case originally went to Tax Court in March, 2008, where the judge   
   concluded that since the first assessment was never received by Mr. Gray, the   
   second assessment was "too late, and therefore invalid." The CRA appealed this   
   decision to the Federal    
   Court of Appeal.   
      
   The Appeal Court stated that there were two possibilities: the original   
   assessment dated June 5, 2003, was mailed by the CRA and simply not received   
   by Mr. Gray or, alternatively, it was never mailed in the first place.   
      
   If the first assessment was mailed on June 5, 2003, the reassessment, dated   
   Feb. 24, 2006, is within the three-year period.   
      
   If, on the other hand, the first assessment was never mailed, the three-year   
   period had not even started and therefore the reassessment was also valid.   
      
   Mr. Gray was thus ordered to pay tax on the RRSP withdrawal as per the Notice   
   of Reassessment.   
      
   -Jamie Golombek, CA, CPA, CFP, CLU, TEP, is the managing director, tax and   
   estate planning, with CIBC Private Wealth Management in Toronto.   
      
   Jamie.Golombek@cibc.com   
       
   -----------------------------------------------------------    
   Miss a Tax Tale Miss a lot!    
   Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com    
   ------------------------------------------------------------    
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