We examine the income tax return, schedules and forms sent by a trust, then issue a notice of assessment.
However, we may review the return and issue a notice of reassessment within:
- three years (four years in the case of a mutual fund trust) after the later of the following dates:
- the mailing date of the original notice of assessment or of the notification that no income tax was payable for the taxation year,
- the date on which the return for the taxation year is filed;
- six years (seven years in the case of a mutual fund trust) after the later of the aforementioned dates, if the trust requests the carry-back of certain deductions or changes the amount of such a carry-back, such as when it completes Schedule D of the Trust Income Tax Return (TP-646-V) to request the carry-back of a net capital loss or a non-capital loss.
For taxation years ending after October 2, 2016, we may issue a notice of reassessment after the expiry of the normal reassessment period if the trust (or a partnership of which the trust is a member) does not inform us of the disposition of its immovable property in its income tax return filed for the year the disposition occurred (or in the information return of the partnership, where applicable).
Formal demand related to the general anti-avoidance rule
If a notice of reassessment is issued under the general anti-avoidance rule (GAAR) to a trust that is the subject of a formal demand concerning unnamed persons, the prescription period for issuing such a notice is suspended:
- as of the day the judge granted the authorization to send the formal demand if the application for authorization was filed with a judge of the Court of Québec after November 10, 2017, but before July 11, 2018;
- as of the day the application for authorization to send the formal demand was filed if the application was filed with a judge of the Court of Québec after July 10, 2018.
Additional provision for the suspension of the prescription period
If, after July 10, 2018, we send a formal demand for information or documents to a named person or if we file an application for an order with a judge of the Court of Québec, the prescription period for issuing a notice of reassessment is suspended as of the earliest of the following dates, regardless of whether the information or documents are held outside Canada:
- the date the formal demand is notified by registered mail or by personal service; or
- the date the application for an order is made.
Non-resident persons not dealing at arm's length with a trust
If losses are carried back as part of transactions involving a non-resident who is not dealing at arm's length with a trust, the three-year period for issuing a notice of reassessment is extended by three years as of the date the losses are carried back to a previous year.
This measure applies to a notice of reassessment that concerns the adjustment to the carry-back of a loss if:
- the notice is issued for a taxation year as a consequence of a transaction involving a trust and a non-resident person who is not dealing at arm's length with the trust;
- the notice reduces the loss that the trust can carry back for the taxation year; and
- all or part of the loss was carried back to the previous taxation year.
This measure applies to any taxation year that ends after February 26, 2018, and to which the trust carries back a loss.