In Quinco Financial Inc v R, 2016 TCC 190, Justice Bocock held that interest on a GAAR assessment accrues from the balance due date, just like any other assessment. His Honour, however, in obiter, also stated that a taxpayer has an obligation to self-assess under the GAAR!
Jennifer Flood (“Must a Taxpayer Self-Assess Under GAAR?” Canadian Tax Highlights 24:11 (Nov 2016)) isn’t impressed:
Underlying the TCC comments in Quinco is an uncontroversial notion: a taxpayer that engages in a tax-avoidance transaction is well aware that GAAR may apply, and this taxpayer, in undertaking the transaction, assumes the risk that an interest charge will be imposed if GAAR applies. The accrual of interest from the balance-due day for the year is in all likelihood an intended and reasonable consequence of GAAR. However, it is far from clear that Parliament intended a taxpayer to self-assess under GAAR and to be subject to unlimited reassessment periods and penalties for failing to self-assess in the manner that the CRA ultimately decides was most appropriate. Respectfully, self-assessment under GAAR raises a quagmire of interrelated problems under the Act, and this suggests that the issue of self-assessment is one best left for Parliament.
Apparently the decision is under appeal.
