23 December 2002 External T.I. 2001-0096585 - Balance due day of Rights or Things return

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: The application of subsection 161(1) to a rights or things return filed under subsection 70(2).

Position: Subsection 161(1) will apply after the day that is the taxpayers "balance due day" as defined in subsection 248(1). In this situation, the balance-due day will be April 30, 2002.

Reasons: The application of the law.

XXXXXXXXXX 2001-009658
F. Francis
December 23, 2002

Dear XXXXXXXXXX:

This is in reply to your letter of August 7, 2001, wherein you requested our comments with respect to the application of subsection 161(1) of the Income Tax Act (the "Act") to the following situation:

? An individual died on January 15, 2001. At this time, the individual had "rights or things" which qualified for the election that the individual's legal representative is permitted to make under subsection 70(2). As a consequence of making this election, the legal representative is required to file a separate return of income for the year in respect of the rights or things (the "Rights or Things Return");

? The individual's tax return for the year of death was filed on April 30, 2002, in accordance with the requirements under paragraph 150(1)(d);

? The Notice of Assessment for the taxation year of death was mailed on June 15, 2002.

You note that the legal representative must file the Rights or Things Return by September 13, 2002, pursuant to subsection 70(2), since this date is the later of the date that is 90 days after the day that the Notice of Assessment was mailed and the day that is one year after the date of death of the individual. It is your view that subsection 161(1) is applicable to unpaid taxes on the Rights or Things Return after April 30, 2003. You request our views in respect of this issue.

OUR COMMENTS

Subsection 161(1) provides that a taxpayer shall pay interest on amounts owing to the Receiver General on late balances after the day that is the taxpayer's "balance-due day" for a taxation year. Under the provisions of subsection 70(2), where the legal representative of the deceased individual has filed a Rights or Things Return within the prescribed time period, the Rights or Things Return is considered to be a tax return of another person for the taxation year in which the individual dies. Consequently, pursuant to paragraph (c) of the definition "balance-due day" in subsection 248(1), the balance-due day for the Rights or Things Return for the 2001 taxation year will be April 30, 2002. Subsection 161(1) will therefore apply to unpaid taxes on the Rights or Things Return after April 30, 2002.

The above comments represent our general view with respect to the subject matter and are not binding on the Canada Customs and Revenue Agency, as explained in paragraph 22 of Information Circular 70-6R5. We trust that the foregoing will be of assistance to you.

Yours truly,

for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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