2 March 1999 External T.I. 9829925 - DEFINITION OF GROSS REVENUE

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: Does the definition of "gross revenue" in 248(1) include amounts received as prepaid lease payments and accounted for as deferred or unearned revenue when considering if the taxpayer is exempt from the CCA restrictions in reg. 1100(15 and (16)?

Position:			No

Reasons: Gross revenue for an accrual taxpayer should only include amounts included in income under section 9.

XXXXXXXXXX 								982992
J. P. Dunn
Attention: XXXXXXXXXX 

March 2, 1999

Dear sirs:

Re: Definition of Gross Revenue

We are writing in response to your correspondence of November 8, 1998 in which you had requested the views of the Department regarding the meaning of the term “gross revenue” in the context of subsection 1100(15) of the Income Tax Regulations and, more specifically, whether such term would encompass amounts received by a lessor on account of prepaid lease revenues which are accounted for by that lessor as unearned or, deferred, revenue.

As you note, the term “gross revenue” of a taxpayer for a taxation year is defined in subsection 248(1) of the Income Tax Act (the “Act”) as the total of two amounts and, assuming that only the first amount in that definition would be relevant to the situation under consideration, the “gross revenue” of the taxpayer would be comprised of “all amounts received in the year or receivable in the year (depending on the method regularly followed by the taxpayer in computing the taxpayer’s income) otherwise than as or on account of capital”.

It is the view of the Department that such an amount would be equal to the income of the taxpayer for the year as computed for the purpose of section 9 of the Act which would not include any amount required to be included in the income of the taxpayer for that year pursuant to paragraph 12(1)(a) of the Act in respect of amounts received in the course of carrying on business but not otherwise included in income.

We trust that this is the information which you require.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate