25 July 1990 External T.I. 9011555 F - Advance Ruling Request Withdrawal

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.

Dear Sir:

Re:   24(1) Advance Income Tax Ruling Request Withdrawal

We wish to respond to your written correspondence dated April 6, 1990 and better explain the information contained in our last letter to you on March 23, 1990, so that you may fully understand and appreciate the Department's policy with regards to fees charged for advance income tax rulings.

With regards to the issues you raised in your letter, we are greatly bewildered in your perception of the rulings process since we have taken great measures in our dealings with you in the past to explain our mandate, the services we supply and our fee policy.  We wish to once again take this opportunity to clarify the course of procedures the Directorate followed and the policies applied with regards to the above-mentioned advanced income tax ruling request.

We would like to comment on the first issue you raised wherein reference was made to an article in the Globe and Mail in October 1989.  The article was written by a newspaper reporter, not the Department, and it did not present the policy the Department follows regarding the billing of advance income tax rulings.  The Department's billing policy has always been and still is to charge for the work performed.  The Department's position is that the cost of providing a service in respect of a request for an advance income tax ruling should be borne by the person to whom the service is provided.

Secondly we wish to reassure you that the Department in no way attempted to either delay nor hinder the issuance of a response to your request for advanced income tax rulings for 24(1). The Directorate always makes a concerted effort to 24(1) and expedite all dealings a taxpayer has with the Department especially prior to a business transaction.  The raison d'être of the service we provide is to promote the voluntary compliance, uniformity and self-assessment by providing the taxpayer with certainty in respect of proposed business transactions, and for this to work efficiently one of the requirements is to deal with requests as quickly as possible.  However, in order for the Department to provide this service there are certain requirements which must be adhered to so that a fair and equitable system exists.  In this regard the Department has issued Information Circular 70-6R (copy enclosed) which contains the Department's policy regarding requests and the guidelines under which the Department operates.

Paragraphs 15, 16 and 17 set forth the procedure to be followed by a taxpayer wishing to request an advance ruling.  Paragraph 16 provides a detailed narration of what is required by the Department so that it may issue a ruling that it will be obligated to respect in the future.  As that paragraph states:

     "The request should contain a clear statement of the questions on which the ruling is required, a complete and detailed statement of the relevant facts and frank disclosure of the purpose of the proposed transactions.  Relevant facts reflected in documents submitted must be included in the statement of facts and not merely incorporated by reference, and must be accompanied by an analysis of their bearing on the issue or issues, specifying the pertinent provisions.  The ruling request should also indicate the specific provisions of the Act with respect to which the ruling is sought, the taxpayer's interpretation of those provisions and the reasons and authorities in support thereof, including case law citations, commentary in tax services, references to tax essays, etc.  In addition, either included in the written evidence authorizing the applicant to act for the taxpayer or in the advance ruling request should be a statement whether any of the issues involved in the ruling request are, to the best of the taxpayer's knowledge, being considered by a District Office and/or Taxation Centre in connection with a tax return already filed, or if any of the issues are under objection.  The minimum fee must accompany the request for a ruling.  If a ruling is given, whether favourable to the taxpayer or not, the appropriate additional fee will be billed to the taxpayer when the ruling is issued."

The process you referred to in your letter as being "The merry-go-round" was a sincere attempt to obtain sufficient information from you and 24(1) which would enable us to issue a response to your requests.  Only with a full understanding of the proposed transaction are we able to respond to your request.  Unfortunately the responses you provided to our initial written request (which had been preceded by several telephone conversations to obtain the same information but without success) was greatly lacking in the detail we had requested, and the Department's last written request dated August 11, 1989 (which was a follow-up to the unanswered written request of June 7, 1989) was not responded to at all.  As you were informed in our August 11 correspondence, under these circumstances, the Department's policy is to presume that the petitioner is not proceeding with the request for the advance income tax rulings and that the request is considered withdrawn.

We must reiterate, that it is never the intent of the Department to either hinder nor delay the issuance of an advance income tax ruling, but to allow a request to pass on its own merits. However, it is essential that we are made privy to the merits of each request so that we may issue a response to the advance income tax ruling request.

As we stated in our letter to you on March 23, 1990, where an advance income tax ruling request is withdrawn for any reason whatsoever, the petitioner is billed the total hours expended on the file.

We hope that we have now responded to all your queries and that we may expect full payment of your account as reflected in our invoice #23816 (copy enclosed).

A. ThibaultA/DirectorBilingual Services and ResourceIndustries DivisionRulings Directorate