Subsection 164(1) – Refunds or Credits on Overpayment of Taxes
Subsection 164(1) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) primarily deals with the refund or credit of taxes paid in excess. Specifically, it governs how the Canada Revenue Agency (CRA) handles situations where a taxpayer has paid more tax than required.
Key Points of Subsection 164(1)
Overpayment of Tax:
Subsection 164(1) applies when a taxpayer has made an overpayment of tax or is entitled to a refund. This could be due to errors, adjustments, or other reasons where the tax paid exceeds the tax liability.
Refund or Credit:
The CRA is required to refund the excess amount or apply it as a credit toward future tax obligations. However, the credit or refund is generally subject to limitations.
The refund is typically issued once the taxpayer has filed the necessary returns (which could include income tax returns, or other relevant forms depending on the situation) and the CRA has processed the claim.
Time Limit for Claiming Refund:
Subsection 164(1) places a time limit on how long a taxpayer or their legal representative has to claim the refund. Generally, the period for claiming a refund is 3 years from the end of the taxation year for which the excess tax was paid.
Procedure for Claiming Refund:
The claim for the refund must be made by filing an amended tax return (if the overpayment was due to an error) or submitting a specific request for a refund if it was identified outside of the normal return process.
The refund will typically be processed after the CRA has reviewed the information submitted, and they will issue a refund cheque or a credit.
Late Filing Considerations:
If a taxpayer does not file their tax return on time or within the specified deadlines, they may forfeit their right to claim a refund unless specific circumstances exist.
Refund Beyond the 3-Year Period Pursuant to Subsection 164(1.5)
Subsection 164(1.5) is a taxpayer relief provision allowing for a tax refund to be issued to an individual even if their income tax return was submitted after the standard three-year deadline for claiming a refund.
Reassessment or Redetermination Beyond the Normal Reassessment Period Pursuant to Subsection 152(4.2)
Subsection 152(4.2) permits CRA to approve a reassessment or redetermination outside the usual reassessment period for an individual. This provision facilitates changes that would lead to a refund or a decrease in the amount owing.
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