CRA is not yet prepared to provide guidelines on when it will reduce specified corporate income based on its view of reasonableness

The determination of what otherwise would be a corporation’s “specified corporate income” for small business deduction purposes is deemed by para. (b) of the s. 125(7) definition to be such lesser “amount that the Minister determines to be reasonable in the circumstances.” When invited to articulate when it might apply para. (b), CRA stated:

What is reasonable or not in the circumstances remains a question of fact… . The CRA will only be able to provide specific examples once it has had the opportunity to fully consider specific fact situations involving a taxpayer’s computation of income otherwise determined under subpara. (a)(i) of the definition of “specified corporate income.”

Neal Armstrong. Summary of 13 June 2017 STEP Roundtable, Q.1 under s. 125(7) - specified corporate income – (b).