20 March 2001 Internal T.I. 2001-0073197 - LARGE CORPORATION TAX

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:

Whether or not the reference to generally accepted accounting principles ("GAAP") in subsection 181(3) is to Canadian GAAP.

Position: Yes

Reasons:

As stated in paragraph 5 of IT-532 GAAP refers to those accounting principles specific to the accounting requirements of the Canadian Institute of Chartered Accountants, the accepted authority for the application of GAAP in Canada.

									March 20, 2001

TORONTO EAST TSO					HEADQUARTERS
Attention:  Sue Miyazaki					Income Tax Rulings
11th Floor							  Directorate
449-2-8
								2001-007319

Part I.3 Tax - XXXXXXXXXX

This is in reply to your memorandum of March 7, 2001 with regard to the reference to generally accepted accounting principles ("GAAP") in subsection 181(3) of the Income Tax Act.

As stated in paragraph 5 of our Interpretation Bulletin 532 and in earlier correspondence GAAP in subsection 181(3) of the Income Tax Act generally refers to those accounting principles specific to the accounting requirements of the Canadian Institute of Chartered Accountants, the accepted authority for the application of GAAP in Canada ("Canadian GAAP"). Where a taxpayer is a subsidiary of a U.S. parent and the financial statements are prepared in accordance with generally accepted accounting principles in the U.S. it would be appropriate that you be provided with unconsolidated financial statements for the subsidiary prepared in accordance with Canadian GAAP along with an official opinion by the taxpayer's auditors confirming that those statements have been prepared in accordance with Canadian GAAP.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Canada Customs and Revenue Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.

We trust that the above will be of assistance.

F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch