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.
5-950490
XXXXXXXXXX J. Teixeira
(613) 957-2095
Attention: XXXXXXXXXX
March 5, 1996
Dear Sirs:
Re: Interest calculation on revised loss claims
This is in reply to your letter of February 22, 1995, wherein you requested the Department's current views on whether arrears interest is exigible when a net capital loss is carried back to offset taxable capital gains of a prior year. The hypothetical situation described in your letter is as follows:
1.Aco suffered a non-capital loss of $1,000 in its 1990 taxation year.
2.In its 1991 taxation year Aco realized a taxable capital gain of $1,000 and applied its 1990 non-capital loss against it, resulting in no taxable income or tax payable.
3.In its 1992 taxation year, Aco has an allowable capital loss of $1,000. It files an amended return for 1991 and claims a deduction under paragraph 111(1)(b) for the $1,000 net capital loss, eliminating the 1991 taxable capital gain.
You asked whether, providing the 1991 taxation year was still open for reassessment pursuant to subsection 152(4), Aco would be able to preserve its non-capital loss as a result of claiming an allowable capital loss to offset the taxable capital gain in 1991, and whether it was the Department's practice not to charge interest under subsection 161(1) in such a situation.
We confirm that the Department's practice not to charge arrears interest in the situation described, as set out in the June 10, 1991 interpretation letter which your letter referred to, is still valid.
The comments expressed are not advance income tax rulings and are not considered binding on the Department, in respect of any taxpayer, in accordance with paragraph 21 of Information Circular 70-6R2 dated September 28, 1990.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and Interpretations
Directorate
Policy and Legislation Branch
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