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 government assistance received in respect of ice storm relief for damages to the crowns of maple trees (a sugar bush business operation) is taxable or reduces the adjusted cost base of the property on which the sugar bush is located.
Position: The assistance is taxable
Reasons: The amount is considered to be a reimbursement of costs incurred in respect of damaged trees.
XXXXXXXXXX 992674
M. Eisner
November 26, 1999
Dear Sir:
Re: Assistance - 1998 Ice Storm
This is in reply to your letter of September 21, 1999 concerning the tax treatment of amounts received by eastern Ontario maple syrup producers as a result of the ice storm in 1998.
You have indicated that part of the assistance received by maple syrup producers was for damage to maple trees. The claim for the assistance was based on an examination of sugar bush lots by adjusters for the Eastern Ontario Disaster Relief Committee. Based on the amount of damages to the crowns of trees, the maple syrup producers have been compensated.
For income tax purposes, you have asked us whether the compensation should be treated as income or as a reduction of the adjusted cost base of the property on which the maple bush is located.
With respect to a sugar bush business operation, it is our general view that government assistance received by a taxpayer to compensate for damages to trees in a sugar bush during the ice storm is considered to be income for income tax purposes pursuant to paragraph 12(1)(x) of the Income Tax Act (the "Act"). This will, however, be offset by related costs incurred in the same year as the assistance is received. If any of the related expenses are incurred in the following year, you should consider the application of subsection 12(2.2) of the Income Tax Act.
If you require any further assistance with respect to an actual situation, you should submit the relevant facts and documentation to your local tax services office.
We trust that our comments are of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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