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.
Principal Issues:
Whether the fiscal period of a corporation ends when it becomes a bankrupt such that it can choose a new fiscal period.
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
Paragraph 128(1)(d) deems the taxation year of a corporation to end on the day immediately before it becomes a bankrupt but this provision has no affect on the fiscal period of the corporation.
950949
XXXXXXXXXX A. Seidel
Attention: XXXXXXXXXX
July 25, 1995
Dear Sirs:
This is in reply to your letter dated April 3, 1995 requesting our opinion with respect to the fiscal year end of a corporation after it has become a bankrupt.
Paragraph 128(1)(d) of the Income Tax Act (the "Act") deems the taxation year of a corporation to end on the day immediately before the day on which the corporation becomes a bankrupt and deems a new taxation year to have commenced on the day the corporation became a bankrupt. Pursuant to subsection 128(3) of the Act, "bankrupt" has the meaning assigned by the Bankruptcy and Insolvency Act.
Unlike paragraph 249(4)(d) and subparagraphs 128.1(1)(a)(ii) and 128.1(4)(a)(ii) of the Act, the deeming provision in paragraph 128(1)(d) of the Act does not deem the corporation not to have established a fiscal period before that time. Therefore the fiscal period previously established pursuant to the definition thereof in subsection 248(1) of the Act will continue to be the fiscal period of the corporation for taxation years subsequent to it becoming a bankrupt unless the corporation has obtained approval from the Department to change its fiscal period.
These comments are provided in accordance with the guidelines set out in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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