17 December 1996 External T.I. 9635295 - INTEREST ON QUARTERLY INSTALMENTS

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:

Determination of the minimum quarterly instalment for an

individual.

Position:

Outlined the steps to arrive at the minimum quarterly amount.

Reasons:

The steps are those taken by T1 Accounting Division.

963529
Jacques E. Grisé
XXXXXXXXXX (613) 957-2059

Attention: XXXXXXXXXX

December 17, 1996

Dear Sirs:

Re: Interest on Quarterly Instalments

This is in reply to your letter of September 30, 1996 requesting our views on the interpretation of subsections 161(2) and 161(4.01) and section 163.1 of the Income Tax Act (the Act) to the circumstances set out in your letter.

You describe a situation where Mr. A has an instalment base of $320,000 for 1994 and $3,000,000 for 1995. Mr. A paid instalments of $80,000 on each of March 15 and June 15, 1996 as well as $1,500,000 on September 15, 1996. Mr. A estimates a $2,500,000 tax liability for 1996 and an instalment payment of $840,000 is to be made on December 15, 1996.

You conclude that provided Mr. A's 1996 actual tax liability does not exceed his estimate of $2,500,000, no instalment arrears interest charges will be levied pursuant to subsection 161(2) of the Act and no instalment penalty interest will be levied pursuant to section 163.1 of the Act, since Mr. A has made the minimum instalments required during 1996 on each instalment due date pursuant to subsection 161(4.01) of the Act, such that the amount paid on each due date was the amount required to bring the total instalment paid, to that date equal to the lowest total amount required to be paid by the individual by that date, utilizing the methods outlined in subsection 156(1) of the Act.

We agree with your conclusion.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch