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:
How change in fiscal period and reserve operate.
Position TAKEN:
Details provided
Reasons FOR POSITION TAKEN:
N/A
952468
XXXXXXXXXX Michael Cooke
Attention: XXXXXXXXXX
September 25, 1995
Dear Sirs:
Re: Use of Calendar Year for Reporting Business Income
This is in reply to your letter of July 6, 1995, concerning the proposed changes to the way in which unincorporated businesses must report their income as announced in the February 27, 1995 budget. The other two issues raised in your letter will be dealt with separately by an officer from the Deferred Income Plans Section of this Directorate.
On July 19, 1995, the Department of Finance released draft legislation along with technical notes on these budget proposals. Moreover, on the same day the Department of Finance issued a News Release which explains how an "alternative method" may operate to permit certain taxpayers affected by these new rules to retain their existing fiscal year-end while at the same time eliminate any potential for the deferral of income.
Since your questions were raised before the draft legislation was released and were general in nature we have enclosed copies of the relevant draft legislation, the technical notes and the News Release for your information. This documentation contains numerical examples which explain how the transitional income reserve calculation and alternative method will operate. As indicated in the News Release the draft legislation for the alternative method is expected sometime in the fall.
We trust this information will be of assistance to you. If after reviewing this information, you still have questions please do not hesitate to contact us.
Yours truly,
F. Lee Workman
Section Chief - Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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