CRA's Power To Audit And Assess: New Developments, Old Problems

The Canada Revenue Agency (CRA) is afforded considerable latitude in administering and enforcing the Income Tax Act (Act). This latitude is reflected in its power to determine the scope of tax audits and issue tax assessments.

Over the past year, there have been key developments, both jurisprudential and statutory, relating to the CRA's power to audit and assess.

First, the Supreme Court of Canada has issued two decisions which confirm that there is divided jurisdiction between the Federal Court and Tax Court of Canada in addressing issues relating to the audit process and the correctness of assessments. This will continue to create challenges for taxpayers where issues arising from one matter may need to be pursued and resolved in different courts.