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 Sirs:
Re: Interpretation Bulletin IT-92R2
This is in reply to your letter of February 1, 1991 concerning paragraph 12 of Interpretation Bulletin IT-92R2.
Paragraph 12 of IT-92R2 explains when the Department will accept the "completion method" of reporting contract revenue. The completion method can be used by a qualifying contractor when the contracts "... may reasonably be expected to be completed within two years from the date of their commencement...".
The determination of whether or not there was a reasonable expectation of completing the contract within two years of its commencement is normally established at the time of entering into the contract. Your letter referred to the time as being "... the time the work began on the project". Although this will often be the same time, the time of entering the contract is the appropriate one. These guidelines may not apply if an original contract is significantly modified while in progress. Such a case would be decided on its own facts.
Generally, the Department would not deny the use of the completion method if the sole reason for the contract extending beyond the two year period was unanticipated problems beyond the control of the contractor. An example might be a strike that could not be foreseen at the time of the entering into the contract or an unforeseen shortage of material.
We trust these comments will be of assistance.
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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