Principal Issues: (1) Whether any or all amounts received or receivable as volume discounts should be included in a corporation's "gross revenue" for purposes of subsection 402(3) of the Income Tax Regulations. (2) Whether this position represents a change of position.
Position: (1) Amounts received or receivable other than on account of capital. Amounts received or receivable that are adjustments to expenses would not be included in gross revenue.(2) This is a change of position only in respect of the definition of gross revenue for purposes of provincial income allocation.
Reasons: The purpose of the formula in 402(3) is to provide a proxy through which to allocate provincial income allocation. While gross revenue can be similar to financial statement revenue, it is technically not the same, as it includes amounts that are usually not included in financial statement revenue, such as those in paragraph 12(1)(a) and (b). This is a change in position on the meaning of gross revenue for purposes of provincial income allocation.