The short answer is yes. The legislators for the most part try to create fair and equitable outcomes where a person has made an error in remitting what is owed by law. For example, section 296 of the Excise Tax Act (ETA) has several provisions that allow the taxpayer to claim tax credits and rebates that they otherwise would be statute barred from claiming when they are assessed for tax. This can be particularly helpful for example if one has an assessment come years after a particular event such as a change in use from short term accommodations to long term accommodations. Technically, a deemed sale of the property occurs and the owner of the property has a tax liability to the Canada Revenue Agency (CRA) on the fair market value of the property. This means that if the person never reports the deemed sale and accounts for the tax on a return, the CRA can assess them for that tax for at least four years following the filing of a return for that reporting period, or forever, if they don’t file a return for that period. By the way, this applies even if one isn’t registered for GST/HST purposes. So, for example, when the new short term accommodations laws for Toronto came into effect in 2019, thousands of short term accommodations properties changed use to long term rentals and the owners all inadvertently became liable under the ETA for 13% tax on the fair market value of the property at the time of the first rental as a place of residence. Let’s say that the CRA assessed them exactly 2 years and 1 day from that change in use, the owner wouldn’t be able to claim the New Residential Rental Rebate by statute and they would owe the entire amount of assessed tax. However, because of subsection 296(2.1) the CRA must include that rebate amount to reduce the “net tax” to be accounted for by the taxpayer. The legislators made a conscious effort to create a fairness mechanism within the Act so that taxpayers paid an amount less any credits or rebates they otherwise would have previously qualified for despite the statutory limitations.

With that said, the CRA doesn’t always get this right, so if you find yourself assessed by the CRA and don’t know whether you should appeal the assessment, contact ZheroTax and we’ll find you a tax professional who understands the law and will give you an honest assessment of your chances of success at Appeals and will offer to take your case on contingency if they believe they will win your case.