WHEN SHOULD THE COURTS ALLOW REASSESSMENTS BEYOND THE LIMITATION PERIOD?
[the predecessor of subparagraph 152(4)(a)(i)] would provide wholly illusory protection to the taxpayer, since the only case in which he would benefit from it, undoubtedly very rare, would be where the re-assessment was designed to correct an error attributable solely to the Department itself. If this had been the purpose Parliament had in mind when it enacted s. 46(4)(a)(i), it is not clear why it provided that the
"Minister may proceed with re-assessments at any time if the taxpayer “has made any misrepresentation or committed any fraud in filing the return.”
In effect, any fraud necessarily presupposes a “misrepresentation,” and if the latter word covered every type of inaccurate representation, the reference to fraud in the provision would be totally unnecessary.
In my view, the fact that the legislator referred not only to “misrepresentation” but to “fraud” indicates that, by the first word, he meant innocent misrepresentation[s] which, without being fraudulent, are still culpable in the sense that they would not have been made if the person committing them had not been negligent. I therefore conclude that a taxpayer who, without any negligence on his part, commits an error in declaring his income, does not make a misrepresentation within the meaning of s. 46(4)(a)(i).
When the Minister seeks to rely on this provision to proceed with a re-assessment after four years, he must therefore not only show that the taxpayer committed an error in declaring his income but also that that error is attributable to negligence on his part.