11 October 2013 Internal T.I. 2013-0475761I7 - Deadline for filing a waiver of tax credit – ORDTC

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: Can a corporation file a waiver of tax credit under subsection 43(1) of the Taxation Act, 2007 (TA) to waive all or part of its ORDTC after the deadline for the filing of its income tax return for the year?

Position: Yes. Generally, a corporation can file a waiver of tax credit under subsection 43(1) of the TA to waive all or part of its ORDTC for a taxation year until the expiration of the normal reassessment period for that taxation year.

Reasons: Subsection 43(1) of the TA.

October 11, 2013

Tax and Charities Appeals Directorate Income Tax Rulings
Appeals Branch Directorate
250 Albert Street, 13th Floor Business and Employment Ottawa ON K1A 0L5 Division
Ananthy Mahendran
905-721-5204

Attention: Beverly A. Quinn 2013-047576
Senior Appeals Officer

Deadline for Filing a Waiver of Tax Credit for Purposes of Ontario Research and Development Tax Credit (ORDTC)

This is in response to your e-mail dated January 23, 2013 wherein you asked for clarification on the filing due date by which a corporation must deliver a waiver under subsection 43(1) of the Taxation Act, 2007 (TA) to renounce all of its ORDTC.

Briefly, you described a situation where a corporation filed its original 2011 T2 return (online) after the filing due date for the return. The return was due in the latter part of December 2011, but the corporation filed it in early January 2012. In late January 2012, the corporation's representative submitted a taxpayer requested adjustment to amend the corporation's return by waiving the full amount of the ORDTC claimed in the 2011 return. The Taxation Centre denied the representative's request stating that the corporation missed the filing due date for the original T2 return.

Subsection 43(1) of the TA states that "A corporation may waive its eligibility for all or a portion of the current portion of its Ontario research and development tax credit at the end of a taxation year by delivering a written waiver identifying the amounts referred to in clause (a) or (b) of the definition of "current portion" in subsection 38(1) with its return required to be delivered under this Act for the year or in an amended return for that year." This subsection allows a corporation which is eligible for the ORDTC to file a waiver of the tax credit either with its original return or with an amended return for the year.

With respect to the filing due date for the amended return, Information Circular IC75-7R3 outlines the CRA's general policy of accepting requests to amend a return. In particular, the taxpayer must file a request for a refund within the normal reassessment period of the taxation year. However, if the request for a refund is submitted close to the date of expiry of the normal reassessment period, the taxpayer should also file a T2029 waiver in respect of the normal reassessment period. This will allow the Minister sufficient time to review and process the refund request. Therefore, in order to amend or correct the information on a tax return, a corporation should file an amended return with the CRA before the expiry of the normal reassessment period.

Subsection 152(3.1) of the ITA, which is applicable for the purposes of sections 112 to 114 of the TA, defines the normal reassessment period as three years from the date of mailing of the original notice of assessment or a notification that no tax is payable for a particular year of a Canadian-controlled private corporation (CCPC). A non-CCPC and a mutual fund trust can be reassessed within four years from the date of mailing of the original notice of assessment or notification that no tax is payable.

Based on the above analysis, a corporation can file a waiver of the tax credit to waive all or part of the tax credit for a taxation year until the expiration of the normal reassessment period for the taxation year.

We hope that these comments will be of assistance to you. If you have any questions or comments, please feel free to contact us.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer.

Yours truly,

Sharmini Ratnasingham
for Director
Business and Employment Division
Income Tax Rulings Directorate