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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
January 11, 1995
Saint John, N.B. D.O. Head Office
Louise Bolduc Rulings Directorate
Client Assistance A.M. Brake
(613) 957-8953
940294
Retiring Fishing Licenses
This is in reply to your fax of February 4, 1994 and confirms the information given in our telephone conversation around that time relative to payments received by fishermen under a compensation program to retire or decrease their fishing rights.
The disposition of a fishing privilege under a license retirement program, in our opinion, would constitute a disposition of an eligible capital amount under subparagraph 14(5)(a)(iv) of the Act. The test found in subparagraph 14(5)(a)(iv) (referred to as the mirror image test) provides that where the consideration given by him therefor (the fishing privilege) was such that, if any payment had been made by him after 1971, for that consideration, the payment would have been an eligible capital expenditure of the taxpayer. If the fisherman had made a payment to acquire the intangible privilege of commercially fishing, in the form of a payment directly to the Department of Fisheries and Oceans or to another fisherman to secure the nomination, then in our opinion this would be an eligible capital expenditure. Hence, any payment by the government to retire this privilege would, on the basis of the mirror image, be an eligible capital amount and, accordingly, fishermen will be entitled to use their capital gains exemption.
Payments received as interference payments would not constitute eligible amounts but rather would be income replacement amounts to be treated as regular self-employed fishing income. Such amounts would include the following:
- Lobster fishing interference payments
- Compensation for not fishing scallops, herring and other species paid under the NSCP fisheries compensation
program - multi-species component.
We apologize for the delay in finalizing this reply.
R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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