Increasingly, the time bar is being breached by the inland revenue. When I say it’s being breached, they’re going beyond for income tax purposes of five years for transfer pricing and beyond seven years. By the way, they can also raise assessments for input taxes relating to GST adjustments at any point in time and if it comes to MAP, they can raise it at the end of the MAP procedure. 

How are they raising it? They’re saying that effectively even though you have actually got good reasons, you’ve got good evidence, and you feel that your positions taken are supportable in law, IRB takes a different position. If they take a different position, they say that’s being caught under negligence. For example, if you file an RPGT return versus an income tax, they say you have filed the wrong return and you should have filed an income tax return. If you have claimed a deduction which they disagree with, they say that’s also negligence.

To me, that is incorrect. At the end of the day, negligence shouldn’t be used in that instance to go beyond the five years. What is the purpose of the time bar? It was to give certainty and finality to the taxpayer and to lessen the burden of record-keeping on the taxpayer. That was the whole purpose of providing this provision in the Income Tax Act.

Can you actually challenge them in the judicial review? No, judicial reviews will not entertain such matters relating to time bar. What are you left with? You have to make sure you either avoid an assessment and right up front convince the tax authorities an assessment is not necessary. If they raise an assessment, you have to go to court. The answer will only come in the future when these issues are debated in the courts.

Ladies and gentlemen, you have to be very careful and I forewarn you that this is happening now. And more of this will happen. So be ready for it. Thank you.