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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
What is the importance of the kilometres driven in the US to the decision whether the taxpayer is carrying on business primarily in Canada?
Position TAKEN:
It is a question of fact. This factor is not determinative. Many other factors to consider.
Reasons FOR POSITION TAKEN:
None
5-950353
XXXXXXXXXX A. St-Amour
Attention: XXXXXXXXXX
June 8, 1995
Dear Sirs:
Re: Definition of "small business corporation" in subsection 248(1) of the Income Tax Act (the "Act")
This is in response to your letter of January 18, 1995, requesting an interpretation of the expression "carrying on business primarily in Canada" in paragraph a) of the definition of "small business corporation" in subsection 248(1) of the Act. We apologize for the delay in responding to your letter.
It appears that your enquiry relates to an actual fact situation. Such questions should be directed to your tax services office. The following comments are, therefore, of a general nature only, and are not binding on the Department.
Whether a particular corporation carries on an active business primarily in Canada is a question of fact which can only be determined after an examination of all relevant facts in the particular situation on a retrospective basis. The fact that kilometres are driven in the United States is an indication that services are carried outside Canada, however it is not determinative. There are many other factors that should be considered as to whether a corporation is in fact carrying on an active business primarily in canada. Such factors may include the place where the contracts are made, where central management decisions are taken, where advertisement is made, where services are rendered as well as the nature of the contracts and the number of employees employed in Canada.
The significance of using independent contractors in the business is a question of fact on which we cannot comment.
As explained in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, the above comments do not constitute an advance income tax ruling and are not binding on the Department. If you have any other questions do not hesitate to contact us.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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