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: Two corporations elect pursuant to s. 191.3 to transfer liability for Part VI.1 tax. When calculating its first and second instalment base, is the transferee required to include the transferor's Part VI.1 tax liability for the preceding taxation years in its first and second instalment bases?
Position: No.
Reasons: A corporation's instalment bases are calculated based on its liabilities. Therefore, the transferor's Part VI.1 liabilities for preceding taxation years would not be included in the transferee's calculation.
February 15, 2013
Payments, Accounting and HEADQUARTERS
Reconciliation Division Income Tax Rulings
Business Returns and Payments Directorate
Processing Directorate Lindsay Frank
750 Heron Road, Ottawa (613) 960-9719
Attention: Kathleen McCaffrey 2012-045535
Composition of a Corporation's Instalment Base
We are replying to your inquiry of July 12, 2012, which is a follow-up to the technical interpretation provided in document number 2011-0406831I7.
You asked us whether a transferee corporation should include in its first and second instalment bases, years 2010 and 2009 respectively, the transferor's Part VI.1 tax from the immediately preceding taxation years.
In the example submitted, a transferor corporation transferred its Part VI.1 tax in the amount of $8,000, to a related corporation ("transferee"), which was assessed pursuant to subsection 191.3(3) in respect of that transfer. The Part VI.1 tax paid by each corporation is as follows:
Transferor
- 2011 Part VI.1 tax = 0
- 2010 Part VI.1 tax = $13,000
- 2009 Part VI.1 tax = $11,000
Transferee
- 2011 Part VI.1 tax = $8,000
- 2010 Part VI.1 tax = 0
- 2009 Part VI.1 tax = 0
As mentioned in document 2011-0406831I7, only the amount assessed under subsection 191.3(3) would form part of the instalment base of the transferee corporation. Since the corporation was not assessed under subsection 191.3(3) in 2010 and 2009 for Part VI.1 tax, no such tax would be included in its instalment base in those years.
We trust that these comments will be of assistance.
Yours truly,
Terry Young, CPA, CA
Manager
Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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, 2013
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, 2013
Email this Content