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.
Principal Issues: Whether there is support for the sentence in paragraph 3 of Interpretation Bulletin IT-259R4 which states, "In order to alleviate the financial burden that might ensue from this situation, acceptable security may be provided in lieu of payment of taxes owing until the time for the final determination of taxes is made or the time period for acquiring the replacement property has expired."
Position: Yes.
Reasons: Subsection 220(4) is the provision that allows the Minister to accept security for payment of any amount that is or may become payable under the Income Tax Act and subsection 220(2.01) allows the Minister to authorize an officer or a class of officers to exercise powers or perform duties of the Minister.
Jean-Francois Goulet
Business Programs Section 2008-028390
TSDMB Charles Rafuse
E07-2024 750 Heron Road 613-247-9237
Ottawa, ON KIA 0L5
August 25, 2008
Re: Section 44 deferral
This is in reply to your email of July 2, 2008, concerning the application of the replacement property rules contained in section 44 of the Income Tax Act (the "Act").
We understand that you have received a field inquiry regarding a sentence in paragraph 3 of Interpretation Bulletin IT-259R4, Exchange of Property, which states, "In order to alleviate the financial burden that might ensue from this situation, acceptable security may be provided in lieu of payment of taxes owing until the time for the final determination of taxes is made or the time period for acquiring the replacement property has expired." The field inquiry you received concerns the manner in which one applies for the tax deferral and what is considered acceptable security. You noted that subsection 44(1) of the Act does not contain any reference to the acceptance of security in lieu of paying the taxes owing and questioned whether paragraph 3 of IT-259R4 should be corrected.
Our Comments
We have reviewed the back-up material of IT-259R4 and its previous versions and noted that there is a memo on file dated February 5, 1982, addressed to the (former) Verification and Collections Directorate, agreeing to their proposal to alleviate the tax burden that might ensue in a situation where the acquisition of a replacement property reduces or eliminates the tax liability arising on the disposition of a former property by taking acceptable security in lieu of payment of taxes owing until the time for the final determination of the taxes is made or the time period for acquiring the replacement property has expired. We would note that subsection 220(4) of the Act is the provision that allows the Minister to accept security for payment of any amount that is or may become payable under the Act and subsection 220(2.01) of the Act allows the Minister to authorize an officer or a class of officers to exercise powers or perform duties of the Minister under the Act. Application for the tax deferral by posting security should be addressed to the Assistant Director of Revenue Collections at the affected Tax Services Office where it would generally be decided what is considered acceptable security, which we understand is dependent on the circumstances of the case under consideration.
We trust that the foregoing comments address your concerns.
S. Parnanzone
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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