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 amount received "in respect of an outlay or expense" under 12(1)(x)(iv) must relate to a deductible outlay or expense (same issue with respect to 12(2.2)(a)).
Position:
No.
Reasons:
Words not limited and context does not require that they be so limited.
XXXXXXXXXX 972150
Attention: XXXXXXXXXX
October 15, 1997
Re: Subparagraph 12(1)(x))(iv) and Paragraph 12(2.2)(a) of the Income Tax Act (the "Act")
This is in reply to your letter of August 7, 1997, in which you ask whether it is our view that the words "an outlay or expense" as used in the above-noted provisions include a non-deductible outlay or expense. You refer to our previous technical interpretations of June 5, 1990 (Doc. No. ACC9598), June 19, 1992 (Doc. No. E9215455) and August 31, 1992 (Doc. No. E9212795). We also thank you for your fax of September 10, 1997, enclosing a copy of the document dated June 5, 1990.
In our view the words "an outlay or expense" as used in both subparagraph 12(1)(x)(iv) and paragraph 12(2.2)(a) of the Act extend to a non-deductible expense or outlay. Thus, a reimbursement of such an outlay or expense would be required to be included in income in accordance with subparagraph 12(1)(x)(iv) of the Act and the taxpayer would be entitled to elect pursuant to subsection 12(2.2) of the Act, provided the requirements of both provisions are otherwise satisfied.
Although the foregoing comments are not binding on the Department, we trust they will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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