Paragraph 20(1)(m) - Reserve in respect of certain goods and services
Cases
Westcoast Petroleum Ltd. v. The Queen, 89 DTC 5153, [1989] 1 CTC 363 (FCTD)
The taxpayer could not deduct a reserve in respect of revenues which it had collected in excess of the approved rate, and which therefore...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 83 | |
| Tax Topics - Income Tax Act - Section 9 - Timing | future obligation for offsetting tariff reduction | 108 |
Dixie Lee (Maritimes) Ltd. v. The Queen, 88 DTC 6108, [1988] 1 CTC 193 (FCTD), aff'd 91 DTC 5518 (FCA)
In consideration of the payment to the taxpayer of franchise fees the taxpayer granted to the franchisee the right to use the taxpayer's name and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Timing | substantial performance of services for franchise fees | 156 |
Burrard Yarrows Corp. v. The Queen, 86 DTC 6459, [1986] 2 CTC 313 (FCTD), aff'd sub nomine Versatile Pacific Shipyards Inc. v. The Queen, 88 DTC 6352 (FCA)
S 20(1)(m) only provides a reserve in respect of amounts which would be considered to be unearned in the absence of s. 12(1)(a).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b) | 64 | |
| Tax Topics - Income Tax Act - Section 9 - Timing | 30 |
Sears Canada Inc. v. The Queen, 86 DTC 6304, [1986] 2 CTC 80 (FCTD), aff'd 89 DTC 5039 (FCA)
A reserve which otherwise would be non-deductible because of s. 18(1)(e) may be deducted if it complies with s. 20(1)(m). "The paragraph allows...
Dominion Stores Ltd. v. MNR, 66 DTC 5111, [1966] CTC 97 (Ex Ct)
The taxpayer issued trading stamps to the value of 1.5% of the price paid for merchandise at its retail food stores. When a customer had...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 68 | 76 |
See Also
Doteasy Technology Inc v. The Queen, 2009 DTC 1019, 2009 TCC 324
Prepaid service fees received by an internet website hosting and domain name registration company were eligible for the s. 20(1)(m) reserve...
Ellis Vision Incorporated v. The Queen, 2004 DTC 2024, 2003 TCC 912
The taxpayer produced documentary programs for broadcast television and granted broadcasters the exclusive right to show the programs for the term...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Provincial Law | 40 |
Blue Mountain Resorts Ltd. v. The Queen, 2002 DTC 1886 (TCC)
Before the commencement of its taxation year on November 1, the taxpayer, which operated ski and tennis facilities in Collingwood, Ontario, sold...
Deputy Minister of Revenue for Quebec v. Le Compagnie Meloche Inc., 2002 DTC 7169 (Que. CA)
The taxpayer, which was involved in the business of picking up and burying waste from various sites, was found to be obligated under environmental...
Redhead Equipment Ltd. v. The Queen, 2001 DTC 429 (TCC)
As part of a warranty program provided by the manufacturer of graders, the taxpayer, which was a distributor, was required to inspect graders sold...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(7) - Paragraph 20(7)(a) | 93 |
Gagnon v. R., 99 DTC 845, [1999] 4 CTC 2426 (TCC)
Bowman TCJ. accepted an agreement of both parties to have a lump sum received by the taxpayer (the proprietor of a software development...
I.B. Pedersen Ltd. v. The Queen, 94 DTC 1085, [1994] 1 CTC 2355 (TCC)
The taxpayer, which operated a waste landfilled site, was unable to establish that fees it received from a municipality for a municipal waste that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 72 |
Administrative Policy
16 February 2016 External T.I. 2015-0618601E5 - Earned or Unearned Revenue
CRA considered that a lump sum payment received from a major supplier for signing a 15-year “supplier loyalty agreement” would be includible...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 56.4 - Subsection 56.4(2) | no deferral of lump sum received on signing 15-year supplier loyalty agreement | 182 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | lump sum received on signing 15-year supplier loyalty agreement was immediately recognized inducement | 200 |
9 October 2015 APFF Roundtable Q. 9, 2015-0595661C6 F - Question 9 - Table Ronde APFF 2015
Distributors received up-front payments from a manufacturer for their agreement to provide services in connection with promoting the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Timing | damages clause might represent a condition permitting deferral of income recognition | 264 |
2015 Ruling 2015-0601441R3 - XXXXXXXXXX Partnership - winding up
Current structure
Sub1 and Sub2 (both taxable Canadian corporations and wholly-owned subsidiaries of Parent) are currently the sole partners of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 98(5) wind-up through s. 85 transfer of partnership interest of one partner to the other and preceded by debt assumptions | 292 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest deductible following assumption of interest-bearing internal debt on s. 98(5) wind-up | 297 |
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(11) | continuation of s. 34.2(11) reserve following partnership wind-up | 339 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) | flow-through of s. 20(1)(n) reserve on s. 98(5) wind-up | 289 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) | s. 20(24) election on s. 98(5) wind-up | 307 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) | s. 18(9) deduction claimable by transferee former partner following s. 98(5) wind-up | 241 |
| Tax Topics - Income Tax Act - Section 147.2 - Subsection 147.2(8) | s. 147.2 continuity following s. 98(5) wind-up | 368 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(i) | no income inclusion on assumption on s. 98(5) wind-up of DSUs and RSUs | 356 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement - Paragraph (k) | no income on RSU/DSU assumption | 22 |
20 August 2015 External T.I. 2015-0588871E5 - Taxation of insurance contract commission income
S. 32(1) permits an insurance agent or broker to deduct a reserve from unearned commissions otherwise included in income under s. 12(1)(a)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 32 - Subsection 32(1) - Paragraph 32(1)(b) | reserve not available based on potential claims processing | 238 |
10 October 2014 APFF Roundtable, 2014-0538131C6 F - revenus d'achats intégrés
Where a taxpayer makes In-App sales of life or experience points to gamers, is there an inclusion under s. 12(1)(a) and a deduction under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(a) | full inclusion for in-app sales | 68 |
29 January 2010 Internal T.I. 2009-0339541I7 F - Inclusion au revenu et provision
Corporation A, which is involved in the distribution, warehousing, handling, and packaging of goods, invoices and receives revenue currently for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(a) | advance fees for futures goods-handling services included in income under s. 12(1)(a) rather than s. 9 | 129 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense | no deduction from prepaid fees of estimated cost of performance | 94 |
7 October 2005 APFF Roundtable Q. 26, 2005-0141171C6 F - Prepaid Income - Reserves when no contingency
The reserve is not available with respect to a prepaid amount received under a services contract where the taxpayer is entitled to retain the...
27 September 2004 External T.I. 2003-0048241E5 - site reclamation costs
Respecting whether the CRA would accept a reserve being deducted under s. 20(1)(m) in a situation similar to that considered in Deputy Minister of...
Income Tax Technical News, No. 30, 21 May 2004
Although, as a general rule the inclusion/deduction mechanism provided under ss.12(1)(a), 12(1)(e) and 20(1)(m) should apply to amounts received...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | 38 | |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | dollar amounts not artificial; parent lossco must have independent income source | 143 |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) | 27 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 112 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 96 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | general partner cannot contract on its own account with partnership | 232 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(g) | 38 |
9 January 2004 External T.I. 2003-0049195 F - Winding Up or a Contractor Subco
Opco, which is wholly-owned by Holdco, and has been using the percentage-of-completion method in computing its income from its construction...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(e.1) | s. 88(1)(e.1) would permit parent to step into shoes of sub re s. 12(1)(a) inclusion and s. 20(1)(m) reserve | 161 |
| Tax Topics - Income Tax Act - Section 9 - Timing | exclusion of contract holdbacks and unapproved invoices from construction contractor’s income is unaffected on s. 88(1) wind-up and flows through to parent | 174 |
20 November 2003 External T.I. 2003-0033545 - partnership dissolution
A former partner who carries on the partnership of the business as a sole proprietor as described in s. 98(5) may claim a reserve under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) | partnership is taxpayer/application to s. 98(5) wind-up | 68 |
23 September 2003 External T.I. 2002-0172175 F - Arrangements Funérailles - Provision 20(1)m)
Regarding the 10% amount that a funeral home is not required to hold in trust pursuant to the Act respecting funerals and sepultures, R.S.Q....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(a) | prepaid funeral amounts which a funeral home was not required to hold in trust were s. 9, not s. 12(1)(a), income | 86 |
7 July 2003 External T.I. 2001-0091415 F - Income & Losses from Bus. or Prop. Sec. 9 ITA
A funeral home (“Opco”) granted 99-year concessions to “Buyers” of a niche or crypt located in a columbarium or mausoleum in consideration...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(a) | prepaid crypt fees of funeral home were includible under s. 12(1)(a) | 107 |
5 May 2003 External T.I. 2002-0140805 F - Arrangements funéraire - Provision de 20(1)m)
CCRA indicated that the portion (10% or less) of prepaid amounts received by a vendor of funeral services arrangement which it was not required to...
1994 APFF Round Table, Q. 4
A taxpayer "may deduct under paragraph 20(1)(m) of the Act a reserve amount less than the maximum allowable".
92 C.R. - Q.39
Where, in addition to annual membership fees, a one-time initial fee is paid to a recreational club by a new member, in order for the club to...
10 October 1991 T.I. (Tax Window, No. 11, p. 22, ¶1516)
Discussion of application of reserve to a retailer who sells goods for a selling price that is receivable in 36 monthly instalments.
4 September 1991 Memorandum (Tax Window, No. 9, p. 20, ¶1440)
Where a health club or recreation club charges an up-front lifetime membership fee to a new member, the club will not be entitled to a reserve in...
24 July 1991 T.I. (Tax Window, No. 7, p. 17, ¶1370)
The exclusion for containers which are bottles in s. 20(1)(m)(iv) applies to returnable bottles used in the business of supplying bottled water,...
29 January 1990 T.I. (June 1990 Access Letter, ¶1250)
The portion of an up-front fee received by a bank in consideration for a granting in interest rate cap is included in its income under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) | 56 |
1 December 1989 T.I. (May 1990 Access Letter, ¶1209)
Where on a sale of land inventory part of the proceeds are received (and included under s. 12(1)(a)) as a prepayment for the identifiable cost of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(2) | 44 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(3) - Land | 12 |
89 C.P.T.J. - Q11
Where on the purchase of a gas property, the purchaser assumes the "take-or-pay" liability in respect of the property of the vendor and no s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | 31 |
89 C.M.TC - Q.2
prepaid rent received by a landlord is included under s. 12(1)(a) and amortized under s. 20(1)(m)(ii), if it represents income from a business,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) | 13 |
Subparagraph 20(1)(m)(i)
Administrative Policy
10 January 2008 Internal T.I. 2007-0254551I7 F - Provision relative à certaines marchandises
A franchisor issues gift certificates that its franchisees can purchase for $10 each and then resell to their customers (at the same price). When...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m.2) | s. 20(1)(m.2) available for returned gift certificates sold to franchisees | 157 |
Paragraph 20(1)(m.2)
Administrative Policy
10 January 2008 Internal T.I. 2007-0254551I7 F - Provision relative à certaines marchandises
A franchisor issues gift certificates that its franchisees can purchase for $10 each and then resell to their customers (at the same price). When...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) - Subparagraph 20(1)(m)(i) | ss. 12(1)(a)(i) inclusion and 20(1)(m)(i) available for gift certificates sold to franchisees where goods are only tendered to franchisee, with adjustment for unredeemed certificates | 304 |
Paragraph 20(1)(n) - Reserve for unpaid amounts
Cases
Wollfsky v. The Queen, 2001 DTC 5316 (FCA)
Noël J.A. found that ss.85B(1)(b) and (d) (the statutory predecessors of ss.12(1)(b) and 20(1)(n), were "essential components of a single...
Wolofsky v. The Queen, 2000 DTC 6302 (FCTD)
The taxpayers, who had sold their interest in a property for consideration that included their covenant to continue paying all balances owing on...
Regina Shoppers Mall Ltd. v. The Queen, 90 DTC 6427, [1990] 2 CTC 183 (FCTD)
The taxpayer filed its 1979 and 1980 tax returns on the basis that it was entitled to claim a capital gains reserve under s. 40(1)(a) in respect...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 95 |
Ennisclare Corp. v. The Queen, 83 DTC 5018, [1982] CTC 428 (FCTD), aff'd 84 DTC 6262, [1984] CTC 286 (FCA)
The formula set out below was used by the Court in calculating the reserve for a condominium developer, who typically sold units for a selling...
Schlamp v. The Queen, 82 DTC 6274, [1982] CTC 304 (FCTD)
S.20(1)(n) was found to be available where a portion of the sale price of land was payable on "or before" a day in the subsequent taxation year.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 32 | |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) | 32 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 35 |
Abed Estate v. The Queen, 82 DTC 6099, [1982] CTC 115 (FCA)
The taxpayer, who had been held to have realized taxable profits from the sale in 1959 and 1960 of two parcels of land and who had not filed tax...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(e) | no requirement to include a reserve if no evidence of its claiming in previous sale year | 160 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(7) | 133 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 7 | 100 |
Choice Realty Corp. v. The Queen, 78 DTC 6415, [1978] CTC 613 (FCTD)
The taxpayers treated a gain on the sale of an apartment building in 1969 as a capital gain. The question of a reserve under s. 85B(1)(d) (now, s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition - Paragraph (d) | 75 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 123 |
The Queen v. Esskay Farms Ltd., 76 DTC 6010, [1976] CTC 24 (FCTD)
The taxpayer, wished to sell land to the City of Calgary in consideration for two annual instalments in order to defer a portion of the gain to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Agency | weight given to written agreement terms in finding that intermediary purchased as principal | 122 |
| Tax Topics - General Concepts - Evidence | 81 | |
| Tax Topics - General Concepts - Sham | no sham if documents describe intended legal rights | 354 |
| Tax Topics - General Concepts - Tax Avoidance | no sham if documents describe intended legal rights | 354 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | 143 | |
| Tax Topics - Income Tax Act - Section 245 - Old | 57 | |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 195 | |
| Tax Topics - Statutory Interpretation - Provincial Law | 58 |
Home Provisioners (Manitoba) Ltd. v. MNR, 58 DTC 1183, [1958] CTC 334, [1958] CTC 333 (Ex Ct)
The taxpayer, which sold refrigerators under conditional sales contracts requiring a 10% down payment and the balance payable in 24 monthly...
See Also
Odyssey Industries Inc. v. The Queen, 96 DTC 498 (TCC)
Recapture of depreciation realized by the taxpayer did not qualify as "profit" for purposes of s. 20(1)(n), with the result that the taxpayer was...
Leonard Reeves Incorporated v. Minister of National Revenue, 91 DTC 425, [1991] 1 CTC 2293 (TCC)
The taxpayer's Notice of Objection, when properly construed, objected against the deduction of a reserve by the Minister for the taxpayer's 1984...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(2) | 67 | |
| Tax Topics - Income Tax Act - Section 17 - Subsection 17(1) | 29 |
Lloyds & Scottish Finance Ltd. v. Cyril Lord Carpets Sales Ltd., [1992] B.C.L.C. 609 (HL)
A "block discounting" master agreement was found to establish that the taxpayer was assigning by way of sale to the respondent the amounts...
Administrative Policy
2015 Ruling 2015-0601441R3 - XXXXXXXXXX Partnership - winding up
Current structure
Sub1 and Sub2 (both taxable Canadian corporations and wholly-owned subsidiaries of Parent) are currently the sole partners of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 98(5) wind-up through s. 85 transfer of partnership interest of one partner to the other and preceded by debt assumptions | 292 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest deductible following assumption of interest-bearing internal debt on s. 98(5) wind-up | 297 |
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(11) | continuation of s. 34.2(11) reserve following partnership wind-up | 339 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | continued availability of s. 20(1)(m) reserve following s. 98(5) wind-up | 296 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) | s. 20(24) election on s. 98(5) wind-up | 307 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) | s. 18(9) deduction claimable by transferee former partner following s. 98(5) wind-up | 241 |
| Tax Topics - Income Tax Act - Section 147.2 - Subsection 147.2(8) | s. 147.2 continuity following s. 98(5) wind-up | 368 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(i) | no income inclusion on assumption on s. 98(5) wind-up of DSUs and RSUs | 356 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement - Paragraph (k) | no income on RSU/DSU assumption | 22 |
S4-F7-C1 - Amalgamations of Canadian Corporations
1.95 A person entitled to a reserve under paragraph 20(1)(n), subparagraph 40(1)(a)(iii) or subparagraph 44(1)(e)(iii) in respect of an amount...
93 C.P.T.J. - Q.18
No reserve under s. 20(1)(n) is available for an amount not yet due from the disposition of a Canadian resource property except, in limited...
25 July 1991 T.I. (Tax Window, No. 7, p. 10, ¶1372)
Where an undivided interest in all partnership property, including every receivable, is distributed to the partners in an s. 98(3) winding-up,...
21 September 1990 Memorandum (Tax Window, Prelim. No. 1, p. 7, ¶1003)
Soft costs relating to a particular property should be ignored in computing the profit on the sale of the property.
6 March 1990 T.I. (August 1990 Access Letter, ¶1368)
Semble that where a taxpayer sells inventory for a purchase price that is due in three years' time, and then transfers the amount owing to another...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 76 | 42 |
84 C.R. - Q.17
Where the facts are similar, RC will not challenge the method of reserve calculation accepted in Ennisclare.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) | 25 |
Paragraph 20(1)(p) - Bad debts
Subparagraph 20(1)(p)(i)
Cases
Hokhold v. Canada, 2018 FCA 163
Partly as a delayed consequence of CRA’s seizure of computers and dental equipment of a dental practice and the misplacing of records when his...
Newmont Canada Corporation v. Canada, 2012 DTC 5138 [at 7292], 2012 FCA 214
The taxpayer, a mining company made $8,250,000 in loans to an exploration company. The debt including accrued interest amounted to $8,590.684...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Onus | testimony sufficient to "demolish" assumptions | 159 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | allocation of all of debt settlement payment to principal rather than interest grounded a full bad debt claim for the "unpaid" interest | 103 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | loan made as investment in mining business | 170 |
Estate of the late Donald Mills v. The Queen, 2010 DTC 1301 [at 4078], 2010 TCC 443, aff'd 2011 DTC 5124, 2011 FCA 219
The taxpayer exchanged shares for a promissory note. Under s. 84.1(1)(b), the receipt of the promissory note resulted in a deemed dividend. The...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) | no bad debt deduction | 77 |
Global Communications Ltd. v. The Queen, 98 DTC 6649, [1999] 1 CTC 23 (FCTD)
The taxpayer was required by the arm's-length purchaser of a subsidiary ("Tee Vee U.S.") to release debts owing by Tee Vee U.S. to the taxpayer....
Harrowston Corp. v. The Queen, [1997] 1 CTC 101, 96 DTC 6544
The taxpayer's entitlement under s. 215(6) in respect of non-resident withholding tax that it had failed to deduct from interest payments made to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business | 65 | |
| Tax Topics - Income Tax Act - Section 9 - Expense Reimbursement | recovery of non-deductible amount | 65 |
Flexi-Coil Ltd. v. The Queen, 96 DTC 6350, [1996] 3 CTC 57 (FCA)
Before affirming that the Tax Court Judge did not commit an identifiable error in concluding on the basis of a review of financial statements of...
Liampat Holdings Ltd. v. The Queen, 96 DTC 6044, [1996] 2 CTC 246
At 96 DTC 6020, the inclusion in the taxpayer’s income of deemed interest under s. 17(1) was confirmed. Here, the taxpayer was found to be...
Sutherland v. The Queen, 91 DTC 5318, [1991] 1 CTC 495 (FCTD)
The taxpayer was able to establish that he did not intend the amounts of unpaid management fees owing to him by a company in which he had an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 47 | |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 103 |
Saskatchewan Co-Operative Credit Society Ltd. v. The Queen, 84 DTC 6225, [1984] CTC 628 (FCTD), aff'd 85 DTC 5599 [1986] 1 CTC 53 (FCA)
It was stated, obiter, that if a "loss is in the nature of a bad debt which does not come within the particular requirements of paragraph...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) | 64 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 138 |
Harlequin Enterprises Ltd. v. The Queen, 77 DTC 5164, [1977] CTC 208 (FCA)
The taxpayer was unable to deduct a reserve for the return of paperbacks which it had previously sold to a distributor on the basis of s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 120 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(l) | 92 |
Associated Investors of Canada Ltd. v. MNR, 67 DTC 5096, [1967] CTC 138 (Ex. Ct.)
The taxpayer, which was in the business of selling investment certificates to the public, made advances to its commission salesmen that were paid...
Frontenac Shoe Ltée v. MNR, 63 DTC 1129, [1963] CTC 181 (Ex Ct)
The taxpayer paid certain bills of a company owned by the brother of its shareholder, and approximately four years later claimed these amounts as...
See Also
Hokhold v. The Queen, 2017 TCC 217, aff'd 2018 FCA 163
As a result of CRA’s seizure of half of his dental equipment and his business computers, the taxpayer’s administrative assistant (Mrs....
Delle Donne v. The Queen, 2015 TCC 150
The taxpayer made a loan, bearing interest at 25%, to a corporation ("SA") owned by his brother-in-law, which in turn lent the funds, at the same...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract | "debt" exists irrespective of demand | 99 |
| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | reserve could be claimed on appeal | 90 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(l) | doubtful debt reserve claimed implicitly as at the year end in light of subsequently revealed information | 542 |
Francis & Associates v. The Queen, 2014 DTC 1146 [at 3468], 2014 TCC 137 (Informal Procedure)
A review of a law firm's accounts in 2005 revealed that accounts had been rendered in 2002, 2003 and 2004 which were uncollectible and which had...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) | taxpayers held to standard of wise and prudent law partner | 126 |
Supercom Canada Limited v. The Queen, 2005 DTC 1438, 2005 TCC 589
The taxpayer, which sold substantial quantities of its products to a U.K. corporation with which it was not dealing at arm's length on favourable...
Williams Gold Refining Co. of Canada v. The Queen, 2000 DTC 1829 (TCC)
The value of services provided by employees of the taxpayer to assist a sister company represented revenues notwithstanding that the amounts...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 70 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Gross Revenue | 43 |
Burkes v. The Queen, 2000 DTC 2576 (TCC)
The taxpayer withdrew as partner from a professional firm at the end of its 1992 fiscal year. In preferring (subject to an adjustment made by the...
Anjalie Enterprises Ltd. v. The Queen, 95 DTC 216 (TCC)
In its return for its 1982 taxation year, the taxpayer had taken a deduction under s. 20(1)(p) for a debt owing to it and in 1988 its accountants...
E.C.E. Group Ltd. v. MNR, 92 DTC 2019, [1992] 2 CTC 2376 (TCC)
Before going on to find that a loss realized by a shareholder of a corporation on a disposition part-way through the year to another shareholder...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 130 |
Roy v. MNR, 58 DTC 676 (TAB)
The consideration received by the taxpayer on the sale of a theatre, which gave rise to recapture of depreciation to it, included the assignment...
Hogan v. MNR, 56 DTC 183, 15 Tax ABC 1
Mr. Fisher accepted the determination made by the taxpayer of a bad debt allowance in connection with the transfer of his retail fur business to a...
Administrative Policy
27 March 2018 Internal T.I. 2017-0691941I7 F - Investissement frauduleux – Fraudulent Investment
Individuals had “invested” in what turned out to be a Ponzi scheme under which for many years they paid income taxes on interest reported as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) | s. 152(4.2) reversal of Ponzi interest inclusion must be applied for by 10th anniversary of the taxation year | 252 |
| Tax Topics - General Concepts - Effective Date | court order ab initio declaring loan void would eliminate interest income | 196 |
S3-F9-C1 - Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime
1.43 A taxpayer may claim a deduction for a bad debt pursuant to paragraph 20(1)(p) in the year the fraud is discovered to the extent that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | repayment of embezzlement/losses from theft | 524 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Timing | timing of deduction for loss from theft or embezzlement | 132 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | 314 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 170 | |
| Tax Topics - Income Tax Act - Section 3 | non-enumerated sources included/hobby receipts, windfalls and true gifts excluded | 1077 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(f) | 306 | |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 220 | |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | voluntary payments | 88 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(c) | 142 |
11 October 2013 APFF Roundtable, 2013-0495671C6 F - Déduction d'une partie d'une créance irrécouvrable
When asked how CRA's position - that a debt must be uncollectible in its entirety before it could qualify as a bad debt under s. 50(1) - could be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | comparison of 20(1)(p)(i) and 50(1): latter requires full uncollectibility | 174 |
7 December 2009 External T.I. 2009-0349861E5 F - Déduction pour mauvaise créance
Interest was included in the taxpayer’s returns for 2004, 2005, and 2006 taxation years that was not due until November 2009, but which amount...
27 November 2003 Internal T.I. 2002-0180587 F - Mauvaise créance et taxes de vente
The accounts receivable of a taxpayer include GST and QST that is collectible by it on those sales. Does the write-off of the balance generate a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 224 | remittance of tax by supplier results in subrogation of the Crown’s claim for the tax | 215 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(16) | bad debt credit is not an ITC | 99 |
14 December 1993 Memorandum 931814 (C.T.O. "Bad Debt Reduction for Part of a Loan")
Review of jurisprudence respecting whether a deduction may be taken under s. 20(1)(p) in respect of a partial debt write-down.
17 August 1992, T.I. 921353 (April 1993 Access Letter, p. 135, ¶C20-1141)
In order for the forgiveness of accrued interest owing by a non-arm's length person to be effective, there must be an amendment to the original...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | 41 | |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(3) | 55 |
ATR-6 (22 Jan. 86)
on a restructuring of a corporation in financial difficulty ("Y Ltd.") which owes to X Ltd. a trade receivable which was included in X Ltd.'s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 76 | 66 |
IT-442R "Bad Debts and Reserves for Doubtful Debts"
5. ...[A] bad debt may be claimed in a taxation year only if the debt became bad in that year regardless of how long the debt may have been...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(l) | 0 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Account Receivable | 161 |
Articles
Tetreault, "Canadian Tax Aspects of Asset Securitization", 1992 Conference Report, p. 23:16.
Novek, "Deductibility of Financing Expenses", 1992 Corporate Management Tax Conference, c.3.
Frankovic, "Taxing Times: Foreclosures, Default Sales, Debt Forgiveness, Doubtful and Bad Debts", 1991 Canadian Tax Journal, p. 889.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | 0 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(5) | 0 |
Subparagraph 20(1)(p)(ii)
Cases
Leonard v. Canada, 2022 FCA 195
A US debtor (Mr. Anderson) had defaulted on a mortgage debt owing by him to a US bank, which had commenced foreclosure proceedings under the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | a mortgage securing a loan cannot be treated as a property separate from that loan | 194 |
| Tax Topics - Income Tax Act - Section 10 - Subsection 10(1.01) | no loss from a loan when the loan securing it was cancelled but there was no disposition of the debt itself | 207 |
725685 Alberta ltd. v. Canada, 2009 DTC 6027, 2009 FCA 194
The Tax Court Judge did not make any palpable and overriding error when he found that the taxpayer, which was in the business of oilfield and...
Loman Warehousing Ltd. v. Canada, 2000 DTC 6610 (FCA), aff'g 99 DTC 1113, Docket: 98-201-IT-G (TCC) infra
Noël JA, before rejecting the taxpayer's submission that the post-1993 version of s. 20(1)(p)(ii) contemplated a taxpayer whose ordinary business...
Bosa Bros. Construction Ltd. v. The Queen, 96 DTC 6193 (FCTD)
The construction and development of properties was found to be the taxpayer's ordinary business and, accordingly, interest-free advances made by...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Onus | 132 | |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property | depreciable property where CCA had been claimed and allowed | 111 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | interest-free advances made only re loss protection | 49 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | sale of stratified title property 1 year later on capital account/ secondary intention re ill-affordable property | 210 |
The Queen v. Doral Investment Corp., 79 DTC 5316, [1979] CTC 398 (FCTD)
A company whose business consisted of providing management services, and which previously had made only three loans over a 10-year period, could...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Loans and Financing Charges | 55 |
Chaffey v. M.N.R., 78 DTC 6176, [1978] CTC 253 (FCA)
Although certain companies in which two partners ("Chaffey" and "Taylor") were shareholders carried on a large mortgage business and Chaffey and...
The Queen v. Pollock Sokoloff Holdings Corp., 76 DTC 6181, [1976] CTC 349 (FCA)
An affiliate of the taxpayer made interest-bearing loans to an arm's length individual and, later, as a result of changes in the Quebec taxing...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 123 |
The Queen v. E. V. Keith Enterprises Ltd., 76 DTC 6018, [1976] CTC 21 (FCTD)
The taxpayer, which had invested in various companies involved in the land development and construction business and was actively involved in...
The Queen v. Lavigueur, 73 DTC 5538, [1973] CTC 773 (FCTD)
Although the taxpayer frequently loaned money, either on an interest free basis to tenants or on a short-term basis at a rate of interest that did...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 178 - Subsection 178(2) | 28 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 66 |
Rossmor Auto Supply Ltd. v. MNR, 62 DTC 1080, [1962] CTC 123 (Ex. Ct.)
The taxpayer made an interest-bearing loan of $50,000 to customers in consideration inter alia for their agreement to purchase all their tires and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense | 102 |
See Also
Groscki v. The Queen, 2017 TCC 249 (Informal Procedure)
Respecting a taxpayer who reported a bad debt deduction net of a $170,000 fee that had been rendered by him, Bocock J stated (at paras. 6, 8,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 159 - Subsection 159(3) | a director was not liable for failure to obtain a s. 159(2) certificate before his corporation disposed of most of its assets | 328 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Legal Representative | director without liquidator authorization was not legal representative | 88 |
Meilleur v. The Queen, 2016 TCC 287
Beginning in 2006, the two married taxpayers (Susan and Barry) used their retirement funds and borrowed money to make advances to two real estate...
Newmont Canada Corporation v. The Queen, 2011 DTC 1117 [at 628], 2011 TCC 148, aff'd 2012 DTC 5138 [at 7292], 2012 FCA 214 supra
The taxpayer, a mining company, bought over $9 million of shares in, and made over $8 million in loans to, an exploration company. The taxpayer...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Payment & Receipt | no implied set-off | 171 |
| Tax Topics - Income Tax Act - Section 80.2 | 241 |
Zaenker v. The Queen, 2007 DTC 1365, 2007 TCC 440
Two loans made by the taxpayer were incidental to his ordinary business, which was dealing in real estate. His ordinary business did not include...
Martin v. The Queen, 2007 DTC 1284, 2007 TCC 339 (Informal Procedure)
The taxpayer, a practising lawyer, was not permitted a deduction under s. 20(1)(p)(ii) in respect of losses sustained by her on loans made to two...
Langhammer v. The Queen, 2001 DTC 45 (TCC)
A second mortgage loan, and bonds issued to the taxpayer by a condominium building development, were found to be loans made in the course of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(6) | 86 |
576315 Alberta Ltd. v. The Queen, 2001 DTC 776 (TCC)
The taxpayer ("241467"), which previously had engaged exclusively in a leasing business, was found to be engaged in a financing business that...
Yunger v. The Queen, 2000 DTC 2153 (TCC)
Although members of the taxpayer's family participated as lenders in at least 10 mortgage loan transactions, the taxpayer was involved as lender...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | unleveraged loans made as a simple investment of capital | 127 |
Loman Warehousing Ltd. v. R., 99 DTC 1113, [1999] 4 CTC 2049 (TCC), aff'd 2000 DTC 6610 (FCA) supra
The corporate group of which the taxpayer was a member operated a cash pooling arrangement with a bank (styled a "Mirror Netting Agreement" or...
Singh v. The Queen, 2000 DTC 2031
The taxpayer was a professional engineer working as a project manager through corporations controlled by him and employing him. Over the course of...
Whitland Construction Co. v. The Queen, 99 DTC 33, [1999] 1 CTC 2172 (TCC)
A company with a land development business had a money lending business which consisted of loans to land development joint ventures, tenants,...
Wesco Property Developments Ltd. v. MNR, 89 DTC 590, [1989] 2 CTC 2431 (TCC)
A corporation engaged in the land development business frequently made loans or advances to groups or entities involved in purchasing,...
Robitaille v. American Biltrite (Canada), [1985] 1 S.C.R. 290
Before stating (at para. 5) that "the late payment by Pacific Mobile to American Biltrite was not only normal in the context of their business...
Highfield Corp. v. MNR, 82 DTC 1835, [1982] CTC 2812 (TRB)
The taxpayer, which was a real estate development company and which also made loans to various corporations in which it took a controlling equity...
Administrative Policy
8 July 2013 Internal T.I. 2012-0434991I7 F - Déductibilité d'une perte
As a sideline activity to the practice of his profession, Mr. A and his partners made loans, an activity which required little time in comparison...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | 256 | |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | per jurisprudence on guarantees, taxpayer’s reason for assuming an obligation (to protect an interest-bearing investment) must be examined |
6 March 1995 Memorandum 9430707 Money Lending Business
Detailed discussion of the meaning of the phrase "whose ordinary business included the lending of money", including a discussion of jurisprudence...
14 December 1993 Income Tax Severed Letter 9318147 - Bad Debt Deduction for Part of a Loan
CRA reviewed the older jurisprudence and noted:
From a review of the foregoing caselaw, only Hogan and Wesco have held that a part bad debt...
7 April 1993 Memorandum (Tax Window, No. 31, p. 6, ¶2513)
A standard distress preferred share ruling is that provided the debt arose from one or more loans made by the specified financial institution in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 112 - Subsection 112(4) | 65 | |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 45 |
7 August 1992, T.I. 920376 (May 1993 Access Letter, p. 192, ¶C20-1145)
S.20(1)(p)(ii) will apply to a moneylender that is in the process of winding-up in respect of loans or lending assets that become doubtful or are...
Articles
Guy Fortin, Melanie Beaulieu, "The Meaning of the Expressions ‘In the Ordinary Course of Business' and ‘Directly or Indirectly'", 2002 Conference Report (Toronto: Canadian Tax Foundation, 2003) 36:1-60.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.3) | 0 |