By Mina Michael Alexander

We regularly see taxpayers being assessed beyond the regular reassessment period, based on neglect, carelessness, or wilful default, as per 152(4)(a)(i) of the ITA.

This raises an important question many taxpayers (and advisors) face: What is the legal threshold the CRA must meet to justify reassessing beyond the normal period, and how can a taxpayer successfully push back?

The courts apply a “reasonable person” test. They don’t ask whether the taxpayer made a mistake. Rather, would a reasonable person in the same circumstances, facing the same trauma, stress, and disruptions, have made the same oversight?

Three critical points a taxpayer should keep in mind:

Burden of Proof: is on the CRA The CRA cannot simply point to a missing slip or an error and automatically reopen a statute-barred year. They must prove that the taxpayer failed to exercise reasonable care.

Context is everything: Severe family trauma, medical crises, or similar highly stressful events outside of someone’s control are highly relevant. Courts have recognized that what might look like carelessness in normal times may not meet the legal threshold under extraordinary circumstances.

The error must be attributable to the taxpayer’s neglect: Recent case law, such as Goldhar v. The King,, reinforces that if the taxpayer acted reasonably in the circumstances, the CRA cannot bypass the statute-barred deadline.

Tax law is not blind to the fact that people are human.

Overwhelming personal hardship does not automatically give the CRA the right to reassess years that should otherwise be closed, however it does not automatically justify the error in tax filing.