Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/18/2012

Canada - Assessments, refunds not always based on draft legislation 

July 18:   The Canada Revenue Agency (CRA) released a technical interpretation clarifying that the CRA does not always assess tax based on proposed legislation.

In particular, the CRA stated that it will not assess based on proposed legislation if a significant rebate or refund is at stake. In these instances, the CRA said that generally its past practice has been to wait until the measure has been enacted.


Summary

The CRA’s longstanding practice has been to ask taxpayers to file on the basis of proposed legislation. This practice is consistent with Parliamentary convention that establishes that tax proposals take effect as soon as the Minister of Finance tables the Notice of Ways and Means Motion.


When a particular amendment is enacted, any taxpayers who did not file based on the proposed amendment are expected to take immediate steps to put their affairs in order and, if applicable, pay any taxes and interest owing.


However, in light of the CRA's statement in the technical interpretation, it may be that a taxpayer who files based on proposed legislation may not obtain any benefit from the proposed legislation until it is actually enacted.


Read a July 2012 report prepared by the KPMG member firm in Canada: CRA Will Not Assess or Pay Big Refunds Based on Draft Legislation




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