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.
Principales Questions:
Interpretation of subsection 127(18) of the Act
Position Adoptée:
127(18) of the Act should be applied on a project by project basis
Raisons POUR POSITION ADOPTÉE:
Verbal conversation with finance
September 24, 1997
Audit Directorate HeadquartersSpecialized Compliance Income Tax Rulings and
Enhancement Division Interpretations Directorate
Tax Incentive Audit Section J. Desparois
(613) 957-8953
Attention: Louise Green7-971825
Subsection 127(18) of the Income Tax Act (Act)
We are replying to your memorandum of July 7, 1997 concerning the interpretation of subsection 127(18) of the Act. Essentially, subsection 127(18) of the Act reduces a taxpayer's qualified expenditures by any assistance or contract payments received or receivable by the taxpayer on or before the filing-due date for a taxation year.
For taxation years beginning before 1996, the reduction of qualified expenditures by any assistance and contract payments received or receivable was provided under paragraph 127(11.1)(c) of the Act. The wording of former paragraph 127(11.1)(c) of the Act is substantially different from the wording of subsection 127(18) of the Act. Where paragraph 127(11.1)(c) of the Act applied, the reduction of qualified expenditures was done on a project-by-project basis. It is our opinion that the french wording of subsection 127(18) of the Act now refers to the entire pool of qualified expenditures and not only to a specific project. According to the Tax Legislation Division of the Department of Finance, the policy intent of subsection 127(18) of the Act is to reduce, on a project-by-project basis, a taxpayer's qualified expenditures by any assistance or contract payments received or receivable by the taxpayer on or before the filing-due date for a taxation year. We have been told by the Tax Legislation Division that the french wording of subsection 127(18) of the Act will be modified to reflect the policy. Therefore, we have no objection in applying subsection 127(18) of the Act on a project-by-project basis as it is the policy intent and that the Department of Finance has confirmed that the french wording of that provision will be modified accordingly.
If you have further questions or wish to discuss any of the above, please contact the writer.
Marc Vanasse
Acting Section Chief
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1997
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1997
Email this Content