19 June 1989 Income Tax Severed Letter 7-3921 - Cape Breton investment tax credit

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.

We are writing in reply to your memorandum of May 16, 1989, wherein you requested our comments as related to XXX approved projects. In your memorandum, you outlined the following facts:

XXX

You have requested our comments on the following questions:

• 1) Does the fact that the projects will not be carried out by the same corporation(s) that originally applied for approval affect the eligibility of the projects for the CBITC.
• 2) The definition of "approved project" in section 127(9) of the Income Tax Act (the "Act") states it must be approved upon written application made prior to July, 1988. Will the March 31, 1989 amendments to the original application be considered eligible for the CBITC. Our Comments

We offer the following opinions related to the above questions.

• 1) In our opinion it is the project itself which must be approved prior to July 1988. As such, the fact that the project is carried out by a different company than originally named in the project application should not affect the eligibility of the CBITC.
• 2) In our opinion, the amendments proposed by the taxpayers will not be eligible for the CBITC as the extra equipment and building can not be considered to be part of the "approved project" for the following reasons:
• 1) The amendments were made after July 1988.
• 2) The amendments call for substantial changes to the original projects rather than cost increases or accidentally omitted items.
• 3) Random House Dictionary of the English Language defines project as "something that is contemplated, devised or planned; plan; scheme." As such, only the original "plan" as submitted prior to July 1988 would be considered as meeting the definition of "approved project". Ant significant revision would be considered a new plan or project.
• 4) The French version of the Income Tax Act uses the term "ouvrage approuve" as the equivalent of "approved project". The translation of "ouvrage approuve" is "approved work" and as such supports the view that it is only the undertakings that are included in the original plan which are approved, not any future additions to the originally approved project.

We trust these comments will be of assistance to you.