26 June 2003 External T.I. 2003-0020715 - Fiscal year, cessation of operations

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: whether cessation of a branch's operations results in a taxation year end

Position: no

Reasons: business will continue to be carried on so there would be no new taxation year end

XXXXXXXXXX 								D. Yuen
	2003-002071
June 26, 2003

Dear XXXXXXXXXX:

Re: Canadian Branch - Final Return

We are writing in response to your facsimile dated May 26, 2003, wherein you requested our comments on the filing requirements for a Canadian branch of a company resident in the United States ("USco"). Unless otherwise stated, all references to a statute herein are to the Income Tax Act (Canada), R.S.C. 1985 (5th supp.) c. 1, as amended.

Situation

USco operates in Canada through a branch manufacturing plant. USco has a non-calendar fiscal period. It is anticipated that, during its fiscal period, USco will wind up its Canadian branch and all monies and assets will be returned to USco.

Your Question

You have asked us to confirm the date on which USco must file its final tax return in respect of the branch and when any taxes in respect of operations as well as the branch tax under section 219 will be due.

Our Comments

It is our view that the cessation of the Canadian branch operations, in and by itself, would not give rise to a new taxation year. USco would be required to file its tax return for its normal taxation year within six months after the end of the year pursuant to paragraph 150(1)(a).

We note that the provisions of section 116 will apply in respect of any disposition by USco of the branch's assets which constitute taxable Canadian property as defined in subsection 248(1).

The comments are provided in accordance with the guidelines set out in paragraph 22 of Information Circular IC 70-6R5 dated May 17, 2002, issued by the Canada Customs and Revenue Agency (the "CCRA") and are not considered binding on the CCRA.

Yours truly,

Olli Laurikainen
Section Manager
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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