Filings, Assessments and Related Issues

• Author: Vern Krishna
• Profession: Professor of Common Law, University of Ottawa Barrister at Law
• Pages: 515-579

515

CHA PTER 20

FILINGS, ASSESSMENTS

AND REL ATED ISSUES

A. gENER AL COMMENT

A basic feature of the Canadi an income tax system is th at it relies heav-

ily on taxpayers to sel f-assess their income on an annual basis on a pre-

scribed form and in a prescribed manner. Filing requirements depend

on a taxpayer’s status. Thus, voluntary compliance and self-assessment

are the foundation of the administ rative structure of the Act.

The term “voluntary” is a mi snomer. The tax system does not rely

exclusively upon voluntary compliance. It has persua sive inducements

to encourage taxpayers to disclose their income. The minister can im-

pose penalties, make third-party demands, garnish income, seize prop-

erty and prosecute through the cr iminal process. Indeed, as we see in

this chapter, the CRA powers e xceed those of most other government

agencies and are subject to fewer legislative and judicial controls.

B. INCOME TAX RETUR NS

1) Who Must File

Not all taxpayers must f‌ile t ax returns every ye ar: f‌iling requirements

vary according to the taxpayer’s status, typ e of income earned and tax

credits claimed. The following, however, must f‌ile income tax return s:1

1 Income Tax Act, RSC 1985, c 1 (5th Supp), [ITA], subs 150(1); Information Circu-

INCOME TAX L AW516

• Corporations (other than registered charities);

• Individuals, if they are taxable in the year;

• Individuals who have ta xable capital gains or have disposed of cap-

ital property in the yea r; and

• Individuals who owe an amount under the Home Buyer’s Plan or

Lifelong Learning Plan.

In addition to income tax return s, some taxpayers must also f‌ile vari-

ous information return s that report income that they pay to other ta x-

payers.

2) Filing Deadlines

Taxpayers must f‌ile their return s on prescribed forms. Each retur n is

in respect of a “taxation year”2 in accordance with the following f‌iling

times:

Tax pay er Time L imit Form

Individuals  April of the following

year

T

Deceased Persons  months after death*T

Corporations (whether or not year-end t ax

is payable)

 months after f‌iscal

year-en d

T

Trusts and estates (if tax is payable in

respect of the year)

 days from end of

estate’s or trust’s

taxation year

T

Registered charities (Info. return s)  months after year-end T 

* This rule appli es for individuals who die b etween  November and the no rmal f‌iling date. Where

an individual die s between  January and  Oc tober, the normal f‌iling date ( Apr il) applies.

For individuals in busine ss, the Act extends the deadline for f‌iling from

30 April to 15 June.3

3) Individuals

An individual must f‌ile an i ncome tax return in respect of a taxation

year if he is tax able in the year.4 An individual may, however, f‌ile a

return even though he is not taxable in a pa rticular year. Voluntary

f‌iling a nil retur n even if there is no tax payable tr iggers the limitation

lar 71-14R3, “The Tax Audit” (18 June 1984).

2 ITA, ibid, s 249.

3 Ibid, para 150(1)(d).

4 Ibid, paras 150(1)(d) and 150(1.1)(b).

Filings, As sessments and Relate d Issues 517

period within which the CRA may assess the individual in respect of

the retur n.5

It is generally prudent for an individual to f‌ile annual tax returns

regardless of whether or not she believes that ta x is payable for the

particular ye ar. Otherwise she may be subject to penalties if it is later

established that she was l iable for tax in respect of that year.6

4) Corporations

A corporation (other than a corporation registered as a ch arity) must

f‌ile an income tax return w ithin six months from the end of its tax ation

yea r.7 The return, accompanied by f‌inanci al statements and supporting

schedules, is due whether or not the corporation is tax able.

5) Trusts and Estates

A trust or estate must f‌ile a retur n in respect of each taxation year for which

taxes are payable within ninety days from the end of its t axation year.8

A trustee in ban kruptcy, liquidator, receiver or agent acting on be-

half of a person who has not f‌iled a retur n must f‌ile a return on behalf

of that person withi n the relevant time limit.9

6) Deceased Persons

The legal representative of a person who has died w ithout f‌iling an in-

come tax return must f‌ile the dece ased’s return within six months from

the day of death,10 if the ta xpayer dies between 1 November and the

normal f‌iling d ate. Where the individual d ies between 1 January and 31

October, the normal f‌iling date applies.

7) Desig nated Persons

The minister has additiona l powers. Where a person who is required

to f‌ile an income tax return fails to do so, the minister may de signate

another person to f‌ile the return w ithin a stipulated time.11

5 Ibid, subs 152(4). The prescribed for m for individuals is Form T1 Gener al. Taxpay-

ers f‌iling si mple tax returns may i n certain circum stances use Form T1 Speci al.

6 Ibid, s 162.

7 Ibid, para 150(1)(a).

8 Ibid, para 150(1)(c).

9 Ibid, subs 150(3).

10 Ibid, par a 150(1)(b).

11 Ibid, par a 150(1)(e).