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.
February 14, 1980
HALIFAX DISTRICT OFFICE Chief of Audit J.R. Miller, Chief Audit Review
HEAD OFFICE Corporate Rulings Directorate B. Toyota 995-1787 Manufacturing and Processing for a Fee
This is in reply to your memorandum of January 25, 1980 concerning a claim by a milling company of the manufacturing and processing ("M and P" ) credit.
Our understanding of the facts is as follows:
XXXX
You have expressed the opinion that the company is excluded from claiming the M&P credit pursuant to subparagraph 125.1(3) (b) (x) and that the company is performing a service for a fee.
We do not agree with your conclusions since the company is carrying on an active business of M&P goods for sale or lease and would in all likelihood meet the 10% de minimis test pursuant to clause 125.1(3) (b) (x)(B). We refer you to paragraph 4 of IT-145 which states that the manufacturer or processor of the goods need not be the vendor of the goods. The comments in paragraph 20 of IT-331 are more recent and further clarify this position.
Insofar as fact 2 is concerned, we agree that this is not M&P labour since it is not directly related to "qualified activities" of the company, itself, as required by Regulation 5202. However, to the extent that a portion of the salaries and wages was incurred in the company's M&P operations, that portion would be included in the calculation of M&P labour.
We trust the above will be of assistance.
Chief Services, Public Utilities, & Exempt Corporations Section Corporate Rulings Division Corporate Rulings Directorate Legislation Branch
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