684761 BC Ltd v R, 2015 TCC 288, introduced me to the concept of the “additional assessment”. The CRA reassessed the taxpayer for its 2008 taxation year on December 16, 2011, just before the end of the relevant normal reassessment period. On October 9, 2014, the CRA issued an “additional” assessment that imposed penalties under subsections 163(1) and (2). The latter assessment nullified the December 16, 2011, reassessment, right? No, it didn’t. Subsection 152(4) states in part that “The Minister may at any time make an assessment, reassessment or additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part” [emphasis added]. Justice Rip opined as follows:
[13] In Coleman C. Abrahams v MNR, 66 DTC 5451, President Jackett, as he then was, explained that a first reassessment is displaced by a second reassessment; the first reassessment becomes a nullity. But, if a reassessment is followed by an “additional” assessment for the year, the prior assessment remains intact. The additional assessment adds an amount of tax, a penalty or interest in addition to that which has already been assessed. (See also Lambert v The Queen, 76 DTC 6363 (FCA)).
[14] In the matter at bar, the Minister had assessed an amount she had not assessed earlier, an additional assessment, an assessment of a penalty. Notwithstanding that the assessed penalty may be based on events culminating in the reassessment, it is still an amount, a penalty, in addition to tax previously assessed for 2008. There is nothing esoteric about the additional assessment. It is a procedure available to the Minister.
[15] The appeal from the reassessment of income for 2008 remains a valid and proper appeal; the reassessment is still valid.
I’ll take Justice Rip’s word for it that there’s nothing esoteric about an additional assessment (although in 20 years practising tax law, I’ve never heard of one).
The foregoing prompts some questions, however. It appears that, if the CRA issues an additional assessment, the taxpayer must object to both the original assessment or reassessment and the additional assessment. Can I rely on the CRA always to be clear about when an assessment is an “additional assessment” to another assessment or reassessment so that I know what objections need to be filed?
Or let’s imagine I’m conducting an appeal, and my client makes an unhelpful admission during discovery or even at trial. Can the CRA issue an additional assessment to impose penalties in light of the admission? (Is there some kind of privilege that would prevent this?)
