Revocation of Previously Issued Rulings
Question
Under what circumstances will the CRA choose to revoke or not to abide by the terms of a ruling previously issued to a taxpayer?
Response
Invalidation of rulings is infrequent, but it may occur in cases where there is a material omission or misrepresentation in the statement of relevant facts or proposed transactions submitted by the taxpayer or the taxpayer’s authorized representative. In these cases, the advance income tax ruling will be considered invalid and the CRA will not be bound by it. The facts and transactions in the ruling are, of course, subject to verification at the time of the audit.
Where an advance income tax ruling is issued covering a continuing action or series of actions, or where the transactions are not yet completed and it is subsequently determined that the ruling is in error, it may be revoked. The revocation will not be made retroactively but will apply only to those actions or transactions which take place after the date of revocation.
The Directorate will give the taxpayer written notice of an intention to revoke an advance income tax ruling and the opportunity to make representations before a decision is made. A revocation is effected by written notice from the Directorate to the taxpayer to whom the ruling was issued.
The Directorate will consider harmonizing its policies with those of the Excise and GST/HST Rulings Directorate and is also working more closely with the Audit function. Our current policies are outlined in Information Circular 70-6R5 Footnote 1 . Any revision to the policies will be reflected in a revised circular. Meanwhile, practitioners may bring matters of concern in this regard directly to the attention of the Directorate or to any CRA official, who will relay the information to the appropriate area.