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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Treatment of advances by farmers using cash method.
Position TAKEN:
Question of fact. General comments provided.
Reasons:
Insufficient information provided.
XXXXXXXXXX 2002-011988
T. Young, CA
February 6, 2002
Dear XXXXXXXXXX:
Re. Advances Received by a Cash Basis Farmer
This is in reply to your facsimile of January 23, 2002, wherein you asked us to advise whether a company advance is taxable to a cash basis farmer.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4, dated January 29, 2001. Where the particular transactions are completed, as is the case in your situation, the enquiry should be addressed to the relevant Tax Services Office. Also, it would also be necessary to review all relevant documentation before a definitive determination of the tax implications could be made. Therefore, we can only provide you with the following general comments.
Advances received by farmers who report their income using the cash method are generally treated as loans and would not be reported as income until the time an actual sale takes place. For example, advances received under the Agricultural Marketing Programs Act are treated as loans. However, whether an amount is, in fact, an advance or is received as payment for a sale is a question of fact and must be determined on a case-by-case basis.
There are insufficient details of the amounts shown in the document titled "Advance Details" attached to your letter, to make a determination as to their nature. However, it seems that the amounts are likely payments made in respect of the sale of canola delivered on December 1 and 2, 1999 and thus would be taxable when received. If you have more information regarding these amounts and require further assistance, please contact your local Tax Services Office.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
- 2 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2002
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2002