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.
| |
April 23, 1990 |
| Scientific Research Audit |
Specialty Rulings Directorate |
| Applications Section |
J.D. Brooks |
| Claude LaMarche, A/Chief |
957-2097 |
| Audit Applications Division |
| Audit Programs Directorate |
File No. 7-4796 |
Subject: Paragraph 2900(2)(b) of the Income Tax Regulations
We are writing to you in reply to your memorandum of March 5, 1990. In essence, you queried whether it would be possible to administratively consider the word "paid" in paragraph 2900(2)(b) of the Regulations to mean "payable." In support of your request, you pointed out that, as stated in paragraph II of Interpretation Bulletin 151R3, the Department has adopted the administrative position that the word "paid" in paragraph 2900(2)(b) of the Regulations includes reasonable salaries that accrue at year-end between pay periods and similar accruals that have to be paid by law or are paid shortly after the year-end. You also noted that section 78 of the Act was revised effective in 1986 to restrict the potential for abuse relating to payables.
Our Comments
The most typical example of such payables is that of accrued bonuses and we note that this issue was discussed in our memorandum dated July 28, 1988, addressed to J. Daman of your section, concerning the 24(1) . We stated on page 5 thereof that "it is our understanding that the use of the term "paid" in Regulation 2900(2)(b) was deliberate and intended to deny deductions for, and investment tax credits on, such accruals" (i.e. accrued bonuses). The administrative position referred to in the bulletin is a practical but minor concession made to assist district offices in processing refundable investment tax credit claims. We do not believe that a significant divergence from the actual meaning of the word "paid" can be justified by the recent "tightening" of the rules in section 78.
B.W. DathDirector GeneralSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch
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