5 May 2001 External T.I. 2001-0065915 - Credits to customers of XXXXXXXXXX

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: The appropriate treatment under the Act of certain credit amounts arising to customers of XXXXXXXXXX .

Position: Unable to provide the technical interpretation requested.

Reasons: Confirmation as to income tax consequences of proposed transactions can only be provided in the context of a request for an advance income tax ruling.

2001-006591
XXXXXXXXXX A.A. Cameron
(613) 347-1361
May 5, 2001

Dear XXXXXXXXXX:

We are writing further to your letter dated January 11, 2001 requesting a technical interpretation with regard to XXXXXXXXXX In particular, with regard to the treatment under the Income Tax Act (the "Act") of certain payments being made by XXXXXXXXXX.

Our Comments

Queries regarding the income tax consequences associated with completed transactions should be addressed to the relevant tax services office. Confirmation as to the income tax consequences of proposed transactions are only provided in the context of a written request for an advance income tax ruling. For more information concerning advance income tax rulings, please refer to Information Circular 70-6R4 dated January 29, 2001, issued by the Canada Customs and Revenue Agency (the "Agency"). Nevertheless, we can provide you with the following general comments.

The provisions of paragraph 12(1)(x) of the Act will expressly include in the determination of a taxpayer's income for a taxation year an amount received by the taxpayer, in that year and in the course of earning income from a business or property, from "a government, municipality or other public authority" as a reimbursement, contribution, allowance or assistance in respect of an outlay or expense provided the amount is not a "prescribed amount" (within the meaning assigned by section 7300 of the Income Tax Regulations) and subject to the provisions of subparagraphs 12(1)(x)(v) through (viii) of the Act.

In our view, it would be a question of fact, to be determined from all of the relevant circumstances, whether a particular amount being received by a taxpayer other than from a business or property source would be included in the determination of the taxpayer's income for tax purposes. However, generally, amounts received by an individual from a public authority to offset particular personal expenses of that individual (i.e., expenses not incurred in the course of earning income from a business or property or by virtue of an office or employment) would not be included in the determination of the individual's income for tax purposes unless expressly so included pursuant to a provision of the Act (e.g., paragraph 56(1)(r) thereof).

This opinion should not be construed as an advance income tax ruling and is not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion. We refer you in this respect to paragraph 22 of Information Circular 70-6R4.

If you have any questions concerning this matter, please contact the writer.

Yours truly,

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