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Bolton Steel Tube: TCC orders Crown to reassessment in accordance with settlement

By Larry Nevsky

In Bolton Steel Tube Co Ltd v The Queen (2014 TCC 94), the Tax Court of Canada (TCC) allowed the taxpayer’s motion requesting an order that would require the Canada Revenue Agency (CRA) to reassess the taxpayer in accordance with the terms of a settlement agreement. In doing so, the TCC discussed certain principles regarding settlement agreements and the resulting reassessments.

In Bolton Steel Tube, the CRA reassessed the taxpayer for its 1994, 1995, 1996 and 1997 taxation years on the basis that the taxpayer failed to report income in each of those taxation years.

In 1996, the taxpayer reported $1.2m (£705,199) of income. The CRA added approximately $600,000 of unreported income for total income of $1.8m. During examinations for discovery, the CRA’s representative admitted that approximately $200,000 of the $600,000 increase should not have been made. Accordingly, for the 1996 taxation year, the maximum amount of income the CRA could have added as unreported income was $400,000. The CRA further confirmed this admission in its reply…

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