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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Prepaid Funeral Services
We are writing to advise you of the Department's current position concerning the taxation of interest received on funds held in trust to provide funeral services.
As you know, the Department's interpretation of the income tax law as it applies to the present provincial laws with respect to funds held in trust to provide funeral services is that contributors are required to report the interest earned annually. On May 1, 1992, we advised funeral service associations across the country of our position and indicated that Interpretation Bulletin IT-246 would be revised accordingly for 1992.
In subsequent meetings with you and representatives of The Funeral Service Association of Canada, the Department agreed to delay until 1993 the implementation of the changes set out in our letter of May 1, 1992. This delay was to allow time to solve the administrative difficulties faced by trustees in implementing a reporting system.
We have recently been informed that the Department of Finance is considering an amendment to the law which will legislate the administrative practice set out in IT-246. It is intended that this legislation be effective for the 1993 taxation year.
In view of this proposed amendment, the Department will continue its administrative practice until the legislation becomes law. Consequently, IT-246 will continue to apply until the amendment to the Act is passed. When the legislation is introduced, we will consider whether IT-246 will require a revision.
We appreciate your cooperation during our review of this matter and would like to thank you for your submissions and those of The Funeral Service Association of Canada. This material was especially helpful in understanding the current practices of the Association's members and the financial issues involved.
Yours truly,
C.C. B. Darlingng Acting Director GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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