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 the income included under section 110.5 and a foreign tax credit provided by subsection 126(1) or 126(2) would be permissive amounts under IC84-1?
Position: No
Reasons: IC84-1 definition of permissive amounts.
February 7, 2014
Large File Case HEADQUARTERS
Toronto Centre Tax Service Office Income Tax Rulings
Directorate
Attention: Gordon A. MacGibbon Gillian Godson
2013-051260
Permissive Deduction - Information Circular IC84-1
We are writing as a follow-up to our letter dated July 16, 2013 (our file 2013-048115), concerning the application of subparagraph 152(4)(b)(iv) of the Income Tax Act (the "Act").
In that letter, we stated that an addition to income under section 110.5 of the Act is a permissive amount in the context of Information Circular IC84-1, Revisions of Capital Cost Allowance Claims & Other Permissive Deductions.
To clarify, for the purposes of IC84-1 a permissive deduction is a deduction that is permissible in the computation of income and the amount of the deduction claimed is at the discretion of the taxpayer, but subject to a maximum amount determined by a specific provision in the Act. A permissive amount in the context of IC84-1 would not include a tax credit, such as a foreign tax credit under subsection 126(1) or 126(2), nor would it include the income inclusion provided in section 110.5 of the Act.
As the administration and application of IC84-1 is the responsibility of the Compliance Programs Branch, further questions you may have on the Information Circular should be directed to Leslie Bafia, Manager, Large Business Audit Division, International and Large Business Directorate.
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
cc: Leslie Bafia
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