CRA has power to reassess dissolved Ontario company

Published by Ian Gamble

In correspondence released October 10, 2012 (2012-0455781E5), the CRA said it has the power to reassess a dissolved Ontario company.  This stems from s. 242(1)(b) of the Business Corporations Act (Ontario), which provides that a civil, criminal, or administrative action or proceeding may be brought against a corporation after its dissolution, as if the corporation had not been dissolved.  Further, in Dominion of Canada General Insurance Co. v. The Queen, [1984] C.T.C. 190, the Federal Court Trial Division confirmed that the issuance of a notice of assessment is an “administrative action or proceeding”.  Any assessment of a dissolved company might then form the basis of a derivative assessing action under s. 159 or s. 160 of the Income Tax Act (Canada) (ITA).  The CRA statements were made in connection with a third party’s request for tax information relating to the dissolved company (a lender seeking information in support of a title insurance application).  The CRA also confirmed that it could not release to the third party any tax information relating to the dissolved company, as a result of the confidentiality provisions of the ITA (s. 241).