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: What action will the CCRA be taking to correct the law as a result of the Supreme Court's decision in 65302 BC Ltd.
Position: Apply the law in accordance with the outcome of the decision.
Reasons: Supreme Court decision-Finance is aware and that Department is responsible for tax policy matters.
August 12, 2003
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Elinor Caplan, Minister of National Revenue, has asked me to reply to your letter of July 10, 2003, concerning the deductibility of fines and penalties, and whether the Income Tax Act will be amended as a result of the decision.
Prior to the Supreme Court's decision in the case of 65302 British Columbia Limited, the position of the Canada Customs and Revenue Agency (CCRA) was that fines or penalties could be denied as a business deduction if the event that resulted in the fine or penalty being imposed was avoidable or contrary to public policy. The Supreme Court ruled that in the absence of a specific provision in the Act indicating otherwise, this position had no legal basis. The Court did note, however, that an act could be so egregious or repulsive that the fine or penalty could not be justified as being incurred for an income earning purpose and therefore could not be deductible.
The role of the CCRA is to administer and enforce the Act as passed by Parliament, and interpreted by the courts. Your comments about the need for an amendment to the Act to reduce the effect of this decision relate to tax policy, which is the responsibility of the Department of Finance. In this regard, I assure you that Finance officials are aware of the concerns you raise.
I trust that the information provided is helpful.
Yours sincerely,
Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch
John Oulton
957-2098
2003-003063
July 18, 2003
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