Not Filing Part X.1 Return Leaves Years Open Indefinitely

Hall v The Queen, 2016 TCC 221

Taxpayers and tax professionals sometimes forget that the true income tax is only found in Part I of the Income Tax Act.  The other parts of the ITA impose distinct taxes in particular circumstances.  The ITA also required separate returns in specific circumstances, for example when a taxpayer over-contributes to an RRSP.  Failure to file a required return will prevent the taxpayer from being able to rely on the normal reassessment period limitation.

FACTS

The taxpayer over-contributed to his RRSP, resulting in excess contributions.  He did not file a return for these and was assessed by the Minister under 152(7).

ANALYSIS

Part X.1 applies where a taxpayer has over contributed to an RRSP.  Where a taxpayer has excess contributions, the ITA requires the filing of a return by subsection 204.3(1) (T1-OVP) within 90 days after the end of the year.   The Court noted, at paras 17-18:

Subsection 204.3(1) of the Act, requires a separate return, which is different from the returns filed under Part I. Additionally, the tax payable under Part X.1 is a separate tax from the tax payable under Part I. Subsection 204.3(1) requires a taxpayer to pay the tax payable under this Part (X.1), within 90 days of year end.

Since Part X.1 outlines a separate tax, requiring a separate return from Part I, a return filed under Part I is not applicable to the timing requirements set out in subsection 204.3(1). This approach applies in the same manner to several other parts of the Act.

The Court referred to the decision in Gretillat v Canada, [1998] TCJ No. 143, 98 DTC 1483, in the context of a Part X.4 matter, as support for a separate limitation period for other specific taxes.  See also Gretillat v Canada, [1998] TCJ No. 143, 98 DTC 1483.

It does not matter whether the operation of an ITA provision seems harsh, but where the assessment is lawful, the TCC cannot provide relief –  Lans v Canada,  2011 FCA 290.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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