11 September 1989 Income Tax Severed Letter ACF3155 - Business and Professional Income Tax Guide

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.

September 11, 1989

Current Amendments and Regulations Division D.C. Burnett 957-2078

Mrs. P. McNally Director Enquiries & Taxpayer Assistance Division

Business and Professional Income Tax Guide

This is in response to the memorandum of August 2, 1989 prepared by L. Greenberg concerning the above Guide.

We have the following comments with respect to the Guide:

1) On pages 26 and 27 you mention the Tax Reform changes affecting Classes 1, 10, 10.1 and 38 but ignore Classes 29 and 39.

2) The last line on page 35 reads "Special points concerning capital cost allowance". Page 36 covers more than just capital cost allowance. You may wish to delete the last line on page 35.

3) The last bullet under the heading "Cumulative eligible capital account" on page 38 needs to be revised. K. Meathrell of your Division is currently working on a revision.

4) On page 40 the Note should be changed to read "Qualified transportation equipment and qualified construction equipment do not include equipment acquired after 1988.".

5) On pages 41 and 42 the paragraph on investment cost should be revised. The repayment of assistance does not increase the cost of the property or the amount of the expenditure for investment tax credit (ITC) purposes. Paragraph (e.1) of the definition "investment tax credit" in subsection 127(9) of the Act provides that ITC is earned on the repayment itself.

6) The Note on page 43 needs to be revised. The carry-back to 1988 cannot exceed the lesser of the federal taxes payable and the annual investment tax credit limit.

7) Delete the last sentence of the last paragraph under the heading "Refundable investment tax credit" on page 43. That sentence is only applicable to comments on the calculation of ITC.

8) See copy of suggested changes to first paragraph on page 44.

9) Under the heading "Partnership information returns" on page 44 you may wish to add a note that pursuant to our Minister's Press Release (in process) the information return is not required in respect of partnerships with less than 6 members. Mr. T.A. Smith of Audit Programs should be contacted at 957-3661 to confirm this.

10) Delete the second paragraph under the heading "Tax shelter reporting" on page 48. This information is included in the first paragraph. You also might mention in your explanation of a tax shelter the 4 year period for losses exceeding costs.

11) Why is there no reference to Classes 29 and 39 on page 54?

12) In form T2132, the double asterisk in column (3) of the CCA schedule should be in column (3) of Area A of the Details of Additions and Disposals instead and the explanation should be under the latter schedule. The $20,000 limit applies to the total capital cost, not just the business portion.

13) You may wish to consider revising the various areas concerning "passenger vehicles" to reflect the increased limits announced by Finance in the press release of August 14, 1989.

B.J. Bryson Acting Director Current Amendments and Regulations Division

DCB/jab

c.c.: A. Cockell