On May 19th, the Government of Canada published draft legislative proposals aimed at creating greater flexibility on certain statutory timelines in the midst of the COVID-19 pandemic. If implemented, the proposed Time Limits and Other Periods Act (COVID-19) (the “Proposals“) would give the federal ministers the authority to extend or suspend certain time limits and deadlines set out in certain federal legislation.
The Proposals are broad sweeping and may impact deadlines set out in the Bankruptcy and Insolvency Act (Canada), Canada Business Corporations Act, Canada Labour Code, Income Tax Act (Canada), Excise Tax Act (Canada) and other federal legislation, as well as deadlines for certain civil proceedings. While the Proposals may provide some relief to Canadians, this legislation may also have adverse consequences for certain Canadian taxpayers.
Very generally, the Canada Revenue Agency (the “CRA“) can reassess tax returns for individuals, trusts and Canadian-controlled private corporations within three years of the date of the original Notice of Assessment (the “normal reassessment period“). Once the normal reassessment period for a tax return has expired, such return is generally statute-barred and, under most circumstances, safe from future reassessments.
However, if the Proposals are enacted in their current form, and if the Minister makes an order, the normal reassessment period for a taxpayer’s return that would have expired between March 13, 2020 and September 13, 2020 could be extended until at least September 14, 2020 .
Such an order may apply retroactively by cancelling or varying the effect of the CRA’s failure to assess or reassess a taxpayer between March 13, 2020 and May 19, 2020 (i.e., prior to the publication of the Proposals). This essentially provides the CRA with the opportunity to go back and correct its own oversight and reassess taxpayers that it did not investigate before.
On the bright side, if the Proposals are enacted in their current form, taxpayers who intended to file a notice of appeal to the Tax Court of Canada which had a deadline falling between March 13, 2020 and September 13, 2020 should see this deadline extended to at least September 14, 2020.
There will be 10-day consultation period between May 19 and May 29, 2020, and it is expected that the Proposals will be tabled in Parliament shortly thereafter.
Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.