Canadian Tax Adviser
March 2010

No Refund Where Tax Return Not Filed on Time

Dan Vance
National Practice Leader, Canadian Corporate Tax, Toronto

The recent Tax Court of Canada (TCC) case 3735851 Canada Inc. v. The Queen serves as a reminder that it is important to file a corporate income tax return within 3 years of the end of the taxation year where tax refunds are claimed.

In this case, the taxpayer successfully objected to a CRA assessment, such that the CRA issued a reassessment that resulted in a refund of approximately $25,000 for the 2001 taxation year. However, the CRA refused to process the refund because the corporation's 2001 income tax return was not filed within the 3-year period allowed.

Since the TCC's jurisdiction is to consider the correctness of an assessment or reassessment, which was not at issue in this case, the TCC dismissed the taxpayer's notice of appeal. The TCC has no jurisdiction over refund issues.

KPMG observation
Corporations claiming a refund, although not subject to interest or penalties for late filing, risk losing the actual refund amount if a corporate income tax return is filed after 3 years from the end of the particular taxation year. A refund is only allowed if the corporate income tax return has been filed within this period.

For more information, contact your KPMG adviser.

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