16 February 1997 Ministerial Letter 9641038 - POST-DATED CHEQUES

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.

MINISTER/DEPUTY MINISTER'S OFFICE 96-08358M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER

February 16, 1997

XXXXXXXXXX

Dear XXXXXXXXXX:

I am writing in reply to your letter of December 4, 1996, concerning a perceived change in policy with regard to the timing of reporting income relating to post-dated cheques received by farmers.

I would like to confirm that there has been no change in the Department's position with respect to post-dated cheques. As published in paragraph 6 of Interpretation Bulletin IT-433R, post-dated cheques are normally accepted as security for a debt without extinguishing the original debt and the value of a post-dated cheque is to be brought into income when it is cashable. As mentioned in your letter, this allows farmers who report income on a cash basis and who receive cheques post-dated to January of the following year, to defer reporting the amount of the post-dated cheque until the following year. In rare cases, when a post-dated cheque is accepted in absolute settlement of a debt, such as when both parties agree that the post-dated cheque settles the debt, the value of the post-dated cheque is considered to be income at the time it is received.

I thank you for bringing your concerns to my attention and I trust my comments will clarify this matter for you.

Yours truly,

Jane Stewart, P.C., M.P.

R. Albert
957-2100
January 21, 1997
9641034