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.
XXX
We are writing in reply to your letter of XXX wherein you requested our views as to whether or not a taxpayer would be required to make quarterly income tax instalment payments in the following situation.
As we understand it, a situation has arisen where Federal taxes, less the Refundable Quebec Abatement, is greater than $1,000. When the Federal Sales Tax Credit (FSTC) under section 122.4 of the Income Tax Act (the Act) is taken into account, the tax payable is less than $1,000. On the assumption that the FSTC is included in computing "the aggregate of the taxes payable under this part and part I.1" as set out in section 156.1 of the Act, it would appear in your view, that the taxpayer in this situation would not be required to make quarterly instalment payments.
Our Comments
It is our opinion that the FSTC cannot be taken into account in computing estimated net federal tax payable for instalment purposes. The reasons for our view are as follows.
The FSTC is a refundable tax credit that is considered to be an amount paid on account of tax owing similar to deductions at source and quarterly instalment payments. Since these amounts are not, by definition, amounts that may be deducted in computing tax otherwise payable under Part I of the Act, this credit, other similar credits and amounts paid on account of tax owing, can be refunded to the taxpayer in situations where there is no federal tax payable under Part I. On the other hand, the dividend tax credit, for example, is by definition an amount that may be deducted in computing tax otherwise payable under Part I of the Act that would not be refundable to the taxpayer in situations where no federal tax was payable. To illustrate this difference, section 121 of the Act (dividend tax credit) states that "there may be deducted from the tax otherwise payable under this Part ... any amount ...", whereas subsection 122.4(3) of the Act (FSTC) states that "... the amount ... shall be deemed to be an amount paid ... on account of ... tax under this part ...". As a consequence of this wording the FSTC cannot be included in the computation of the net federal tax payable for instalment purposes.
We trust our comments will be of assistance to you.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
Email this Content