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.
May 15, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your correspondence of February 11, 2000, addressed to
XXXXXXXXXX, concerning a document entitled XXXXXXXXXX. The office of the Honourable Sheila Copps forwarded a copy of your correspondence to Mr. Cauchon on March 27, 2000.
I have noted the proposal XXXXXXXXXX to amend section 31 of the Income Tax Act, to exclude from the application of this provision the breeding and maintaining of horses for racing.
The rules in section 31 of the Act restricting the deduction of farm losses in certain circumstances have been in place for many years. This legislative rule has never contained any exclusion for farm losses arising from a particular type of farming business. The limits apply generally when farming is not a chief source of income, when compared to other sources of income.
As the responsibility for changes to the legislation falls within the jurisdiction of the Department of Finance, this proposal would have to be considered by that department. In this regard, I am informed that the Honourable Paul Martin, Minister of Finance, has responded to XXXXXXXXXX on this matter.
With regard to the suggestion in the proposal that an interpretation bulletin be developed to provide guidance to the horse racing industry on the reasonable expectation of profit test, paragraph 4 of JT-322R, Farm Losses, a copy of which is attached, has a discussion of this test which reflects the views of the Canada Customs and Revenue Agency (CCRA) for all types of farming operations, including the maintaining of horses for racing. These comments were developed based on jurisprudence and are currently used by the Audit Division of our tax services offices when a taxpayer's farming operation is reviewed. Our interpretation bulletins can also be found on the CCRA's Internet site at www.ccra-adrc.gc.ca/menu/EmenuKLA.html.
I trust that my comments will be of assistance.
Your sincerely,
Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch
Attachment
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