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 a company that offers consulting and bookkeeping services, as well as the preparation of financial statements and tax returns is subject to the provisions of new paragraph 249.1(1)(b) of the proposed legislation in respect of fiscal periods contained in the Notice of Ways and Means Motion dated November 27, 1995, which was tabled in the House of Commons on December 12, 1995.
Position
Depends of the facts of each particular situation.
Paragraph 249.1(1)(b) will apply to a professional corporation that would, if the fiscal period ended at the end of the calender year in which it began, be in the period a member of a partnership. The term "professional corporation" will be defined in subsection 248(1) to mean a corporation that carries on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor.
Reasons:
Interpretation of new subparagraph 249.1(1)(b)(iii) and the definition of a "professional corporation" in subsection 248(1).
953212
XXXXXXXXXX B. Kerr
Attention: XXXXXXXXXX
February 1, 1996
Re: February 27, 1995 Budget - Fiscal Periods
This is in response to your letter of October 29, 1995, concerning the proposed changes contained in the February 27, 1995 budget in respect of fiscal periods. You indicated that your business is operated through a limited company which offers consulting and bookkeeping services as well as the preparation of financial statements and tax returns. You have asked whether the proposed changes would apply to your situation.
A Notice of Ways and Means Motion to amend the Income Tax Act (the "Act"), dated November 27, 1995, was tabled in the House of Commons on December 12, 1995. These amendments implement certain measures announced in the Federal Budget of February 27, 1995, including legislation in respect of fiscal periods (the "proposed legislation").
The proposed legislation repeals the meaning of fiscal period in subsection 248(1) of the Act and replaces it with a new meaning under new subsection 249.1(1). In the case of a corporation, new paragraph 249.1(1)(a) provides that the fiscal period may not end more than 53 weeks after the period began. New paragraph 249.1(1)(b) will apply to certain individuals, partnerships and professional corporations and will provide, inter alia, that no fiscal period may end after the end of the calendar year in which the period began.
The proposed legislation includes an amendment to subsection 248(1) of the Act to also define the term "professional corporation" to mean a corporation that carries on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor. It is a question of fact whether a particular corporation carries on a professional practice. Interpretation Bulletin IT-189R2, "Corporations used by practising member of professions", may be of assistance in this regard. However, paragraph 249.1(1)(b) only applies to a professional corporation that would, if the fiscal period ended at the end of the calender year in which the period began, be in the period a member of a partnership. In our view, since your company is not a member of a partnership, the provisions of paragraph 249.1(1)(b) would not apply.
As stated in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, the opinions expressed in this letter are not rulings and are consequently not binding on the Department.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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