15 November 1989 Ministerial Correspondence 74064 F - Income in Year of Immigration

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.

Subject: Child Tax Credit and Subparagraph 115(2)(e)(i) Income

This is in reply to your memorandum dated June 26, 1989 wherein you have requested our opinion as to whether income of a taxpayer which was excluded from the computation of taxable income pursuant to subparagraph 115(2)(e)(i) is included in the computation of income pursuant to subparagraph 112.2(1)(b)(i) in the year the taxpayer immigrates to Canada.

The taxpayer's representative's argument is that the taxpayer is being taxed under section 114 and his income for the purpose of subparagraph 122.2(1)(b)(i) should be computed as if the period in which he was resident in Canada was the whole taxation year.

We would first note that section 114 taxes an individual for the entire calendar year in the year he immigrates to Canada.  For an individual who was not employed or carrying on business in Canada in the year of immigration prior to becoming resident the section divides the year into two parts, the part of the year he was resident and the part of the year he was non-resident, for the purpose of calculating taxable income (not income) for that year. Section 3 and subsection 2(2) are applicable to the paragraph 114(a) part of the year and section 115 is applicable to the paragraph 114(b) part of the year.

In both of paragraphs 114(a) and (b) the computation is done as if the relevant periods were the "whole taxation year".  However, in our opinion, these words are to simply to ensure that the differing rules contained in sections 3 and 115 will be applicable to the two separable periods since the preamble to each of those sections refers to "a taxation year" (which is normally the calendar year for an individual pursuant to paragraph 249(1)(b)).

Consequently, in the absence of any special qualifications to the words "year" and "income" as used in the Act and specifically in subparagraph 122.2(1)(b)(i), it is our view that these words will always mean income computed pursuant to section 3 (i.e. world income) for the entire calendar year.  The fact that a taxpayer's taxable income for a particular calendar year is computed pursuant to section 114 is not relevant in the calculation of his income for the purpose of other sections of the Act.

Therefore, to answer your specific question, it is our opinion that subparagraph 115(2)(e)(i) income should be included in the computation of income for the purposes of subparagraph 122.2(1)(b)(i) for the year in which an individual immigrates to Canada.

We have correspondence on file from the Current Amendments Division which indicates that the wording "income for the year" in paragraph 122.2(1)(b) was chosen deliberately to specifically require immigrants (and supporting persons, where applicable) to compare world income for the entire calendar year of immigration to $24,090 (indexed) when computing their entitlement to the child tax credit for that year.

21(1)(b)

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