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It may be tempting for some taxpayers to write off personal expenses as tax-deductible ones, especially under the guise of a business, but doing so could get your expenses denied by the Canada Revenue Agency and could even expose your prior years’ tax filings to reassessment beyond the “normal reassessment period.”

Indeed, this is exactly what happened in a recent Tax Court of Canada decision released last week in a case involving a taxpayer who was reassessed by the CRA in November 2018 for his 2013, 2014 and 2015 taxation years. The 2013 taxation year was reassessed after the expiry of the applicable normal reassessment period and thus would generally be considered to be “statute-barred.”

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Under the Income Tax Act, once the CRA has initially assessed your tax return, it has the ability to reassess your return provided it’s done within what’s technically defined as the normal reassessment period. For an individual taxpayer (or private corporation), that period is typically three years from the date of the original notice of assessment. After that period, your tax return would be considered statute-barred.