7 August 1990 Income Tax Severed Letter - Cape Breton Investment Tax Credit Program

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.

Subject: Cape Breton Investment Tax Credit Program

This is in reply to your memorandum dated March 23, 1990 regarding the above-captioned subject.

Our understanding of the situation is as follows:

• 1. XXX
• 2. XXX
• 3. XXX
• 4. XXX

For the purposes of subsection 127(9) of the Income Tax Act, (the “Act”) and paragraph 4605(c) of the Income Tax Regulations (the “Regulations”) you have requested our opinion as to whether:

XXX

Our comments are as follows:

XXX

(B) Regarding your concerns, we will attempt to answer the second question first. The definition of the term “approved project” in subsection 127(9) of the Act requires that application of a particular project be made in writing before July 1988 for approval by the Minister of Regional Expansion (the “Minister”). XXX However, if a particular asset to be acquired under the 1989 Plan was described in the Original Plan, it is our view that any such asset, as well as any addition thereto, would be part of the Project. An increase in cost as a result of the addition would not be a reason, in our view, to deny inclusion as part of the assets of the Original Plan. XXX It also follows that, in our opinion, any new separate assets which were not part of the Original Plan could not be considered to be an “approved project property” to be used in an “approved project” for the purposes of subsection 127(9) of the Act and section 4604 of the Regulations for the following reasons:

• (1) The new separate assets would not be considered part of the plan submitted “before July 1988”.
• (2) Such assets may be considered as substantial changes to the Project.
• (3) The Shorter Oxford English Dictionary defines “project” as something projected; a plan, a scheme; a proposal. Based on this definition, only assets described in the Original Plan (and additions thereto) may be considered as meeting the definition of “approved project”.
• (4) The French version of the Act uses the term “ouvrage approuve” as the equivalent of “approved project”. The translation of “ouvrage approuve” is approved work and as such supports the view that it is only the under-takings that are included in the Original Plan which are approved.

XXX

(F) You may wish to refer to our memorandum of June 19, 1989 addressed to you, file 7-3921, which, to a large extent, dealt with a similar situation.

We trust these comments will be of assistance to you.