24 April 1992 Ministerial Letter 9203278 F - Advance Ruling/Barter Transactions

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 14, 1992

Minister/DM's Office                       Y.S. # 92-0859T/1938T

Central Records

19(1)                          R     eturn to Rulings, Room 303, Met. Bldg.

Author

Section Chief

Research File

Subject or Corporate Case File

19(1)

Dear 19(1)

     The Honourable Otto Jelinek, Minister of National Revenue, has asked me to reply to your letters of December 31, 1991 and

January 14, 1992 concerning information for obtaining an advance income tax ruling, the bearing that a taxpayer's previous relations with the Department may have on the issuance of such an advance ruling and the tax treatment of payments in kind and barter transactions.

     As expressed in a letter to you dated June 4, 1990 from the Director, Business and General Division of our Rulings Directorate, the procedures for obtaining an advance ruling are contained in Information Circular 70-6R2, a copy of which is enclosed.

     A taxpayer contemplating a business venture may request an advance ruling as to how the Department would interpret specific provisions of the existing income tax law as it applies to particular proposed transactions of the venture.  As indicated in paragraphs 6 and 14 of the Circular, some limitations apply.  At paragraph 15, the Circular lists the information to be included in an application for an advance ruling.

     Since an advance ruling is based on the law at the time of issuance, a change in the relevant law will terminate its validity but other limitations could be specified in the ruling itself or the Circular.

     We will be pleased to consider a request from you for an advance ruling and would draw your attention to the procedures for doing this that are explained in the Circular.  Presently, I am unaware of any current or ongoing difficulties that the Department's officials are encountering with respect to your income tax affairs.

         Should you wish to review your status with the Department in more detail, I invite you to contact:

Mr. Ron Quinn, Chief of Public Affairs at the Edmonton District Taxation Office,Canada Place, 9700 Jasper Avenue, Suite 10, Edmonton, Alberta T5J 4C8

or by telephoning 495-4771.  Mr. Quinn will be pleased to assist you.

         For tax purposes, the value of services provided under barter arrangements can result in income to the person providing the service if they are of a kind provided in the course of earning income from a business or profession carried on by that person.  Where goods or services are received as payment in kind for occasional help that is not related to a business or profession carried on by the taxpayer, it would not generally be required to impute a value in respect of those goods or services for income tax purposes.                                        

         Unlike gifts of property to charitable organizations, donations of services, i.e. time, skill or effort, do not qualify as deductible gifts and may not be acknowledged by issuance of a charitable donation receipt.

         It is not the practice of the Department to enter into   arrangements for the purpose of accepting the services of taxpayers instead of cash as payment for amounts due under the Income Tax Act.  However, should your assistance otherwise be required, I assure you that officials of the Department will contact you.

         For more information on barter transactions, gifts in kind and deductible gifts, please refer to Interpretation Bulletins, IT-490,

IT-297R2 and IT-110R2 respectively, copies of which are enclosed.

     I would like to thank you for writing and bringing your concerns to my attention.

Yours sincerely,

Pierre Gravelle, Q.C