7 August 1989 Ruling 74163 F - T2038 (IND) - Forms Review

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:  Form T2038 (IND) Rev. 89

We are writing in reply to your memorandum dated June 29, 1989, wherein you requested our comments concerning the proposed changes to the above form.

Our comments are indicated below.

Pages 1, 3, 4, 5 and 6 - Title

Since the calculation of the allowable claim is based on a formula which is applicable only to the 1988 and subsequent years, the reference to "1984" in the title should be deleted and replaced with "1988".

Page 2 - Note 2

The reference to "the certificate of eligibility for the Cape Breton Investment Tax Credit" should be replaced with a reference to "the certificate of qualification as approved project property."

In addition, Bill C-3, the Department of Industry, Science and Technology Act (the "DlST Act"), received third reading in the House of Commons on June 22, 1989.  The DIST Act will make consequential amendments to the Income Tax Act (the "Act") by substituting references to the Minister of Industry, Science and Technology for references to the Minister of Regional Industrial Expansion.  Therefore, you may wish to alter the form in a similar manner.

Page 2 - Specified Percentages

In order to remove uncertainty regarding the rates after 1988, we suggest that you indicate those instances where the rate will be zero or not applicable.  The following changes are recommended:

I.       For Qualified Property, add the following line at the end of (iii) a prescribed designated region, and at the at the end of (iv) any other area:

     "-acquired after 1988          0%"

     Also, "any other area" should be expanded to "any other area in Canada."

2.     For Qualified Transportation Equipment and Qualified Construction Equipment, add the following note:

     "Not applicable after 1988."

3.     For Certified Property "(ii) acquired after 1986, other that the description should read as "(ii) acquired after 1986 and before 1989, other than..."

Page 3

Subsection 127(17) of the Act makes reference to tax otherwise payable but for subsection 127(5) and sections 120.1 and 120.2.  Therefore, in the calculation of amount "y" in the Calculation of Allowable Claim on page 3, you may wish to amend the wording to "Federal tax before deducting any Investment Tax Credit, Minimum Tax Carry-over and Forward Averaging Credit."

General

Corresponding changes to the French version would be appropriate.

We trust our comments will be of assistance.

A.G. CockellDirectorTechnical Interpretations DivisionLegislative and Intergovernmental Affairs Branch