12 September 1989 External T.I. 89M09135 F - 1989 T1 General Return and Schedules (Ontario)

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:  1989 T1 GENERAL RETURN AND SCHEDULES (ONTARIO)

We have three comments concerning these forms:

1.     with respect to line 224 on page 2 of the T1 Return and Part V on Schedule 5, it is our understanding that all taxpayers should claim deductions in respect of the following items on this line:

(i)     Canadian Exploration Expenses (66.1(3) and 66(12.6);

(ii)     Canadian Development Expenses (66.2(2) and 66(12.62));

(iii)     Canadian Oil and Gas Property Expenses (66.4(2) and 66(12.64)); and

(iv)     Foreign Exploration and Development Expenses 66(4).

     Items (i) to (iii) relate to flow through shares and are reported on forms T101A and T102 Supplementary slips.

In calculating a taxpayer's "investment expense" as defined in subsection 110.6(1), paragraph (d) of the definition refers to:

(a)       the above mentioned items (i) to (iv) that are incurred and renounced by a corporation; and

(b)      the above mentioned items (i) to (iv) that are incurred by a partnership of which the taxpayer was a "specified member".  Therefore, in those situations where a partner is an active member of a partnership (i.e. not a specified member of a partnership), these items would not form part of the taxpayer's investment expense.

     Since the comments at line 224 of the T1 Guide and Part V of Schedule 5 are unclear in this respect, please reword the descriptions in these areas to reflect the above mentioned comments. Presumably, Part V of Schedule 5 should include a subtotal amount for the expenses which would be included in a taxpayer's "investment expense" and another total to represent the amount to Alternately, only such items that qualify as "investment expenses" are to be reported on line 224 and neither the forms nor the Guide give any direction to an active partner concerning the reporting of these expenses.

2.     Since line 249 can only be utilized by employees in respect of stock options, it would be clearer to have this modifier in the line description.

3.     Since gifts of cultural property are to be reported on line 342 the present line description is incomplete.

We regret that our comments were not provided at an earlier date but, since they are of a clarifying nature, consideration for change in the 1990 version would be satisfactory.

R.E. ThompsonActing Directortechnical Interpretations DivisionLegislative and IntergovernmentalAffairs Branch