The next measure in the bill is found in clause 18. It relates to the reassessment period for non-resident and non-arm's-length persons. For this one, it might be helpful to add a bit more precision. It's found in subclauses 18(2), 18(4), 18(5), 18(7), 18(10) and 18(12). There is more than one measure in clause 18. That's because it deals with reassessment periods and there are a few different measures dealing with that. I just wanted to add a bit more precision there.
It deals with reassessment periods for non-resident and non-arm's-length persons. These you might think of as transfer pricing reassessments, where you have a transaction between a Canadian entity and a non-arm's-length non-resident and that gets reassessed. The current rules provide an additional three-year reassessment period in respect of these transactions. Another existing rule provides another additional three years where losses are carried back.
As I mentioned earlier in discussing part 4 taxes, losses in one year can be carried forward for up to 20 years and, germane to this point, could be carried back three years. If an assessment is made that affects the losses in a particular year, those losses are reduced, and if those losses had been carried back to a previous year, then the Canada Revenue Agency currently has the ability to reassess in that previous year, purely as consequential to the assessment within the normal reassessment period.
You have these two additional three-year reassessment periods. What this measure does is ensure that they interact appropriately, so that if a taxpayer is reassessed within the additional three years for transfer pricing—transactions with non-arm's-length non-residents, and had carried back that loss prior to the additional three-year reassessment period for transfer pricing, then the CRA would be able to make a consequential assessment relating to that reduction of a loss within the additional three years for transfer pricing. It ensures that the additional three-year period for non-arm's-length reassessment and for the assessment of a consequential assessment of a loss carried back apply consecutively instead of concurrently, but limited to those very specific circumstances.
The next measure—