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:
Prepaid Expenses for Farmers
Position:
Expenses deductible in year paid if they relate to expense for that year or the following year (other than for inventory)
Reasons:
Based on draft legislation of paragraphs 28(1)(e) and 28(1)(e.1)
XXXXXXXXXX 963361
Attention: XXXXXXXXXX
December 11, 1996
Dear Sirs:
Re: Prepaid Expenses for Farmers
This is in reply to your letter of October 1, 1996 in which you request a technical interpretation with respect to the proposed amendments to subsection 28(1)(e.1) of the Income Tax Act ( the "Act").
The Department of Finance released draft legislation to amend paragraph 28(1)(e) and new paragraph 28(1)(e.1) of the Act. It is proposed that the amendments to section 28 will apply to amounts paid after April 26, 1995, other than an amounts paid pursuant to written agreements entered into by the payer on or before April 26, 1995.
Provided that the proposed amendments to section 28 are enacted as described in the draft legislation and that the proper elections are made to report income on the cash basis, expenses paid by a farmer in a taxation year that relate to expenses (other than for inventory) for that taxation year and the following taxation year would be deductible in the year paid.
The above comments are based on our understanding of the draft legislation as presently proposed. They apply in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling and they are not binding on the Department.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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