Section 157

Subsection 157(1) - Payment by corporation

Cases

MNR v. Kayelle Management (Yukon) Inc., 94 DTC 6116 (FCA)

The taxpayer, which was a Canadian-controlled private corporation, had a fiscal year-end of February 1, 1990. It was not required to pay the final instalment of its tax owing for that year until May 31, 1990 because this was the end of the third complete calendar month following its year-end). In finding that the due date instead was May 1, 1990, Décary J.A. noted that: because "year" did not refer to a calendar year, "month" should not be restricted to a calendar month; the taxpayer's interpretation had the effect of having the "following" period start 28 days after the end of its fiscal year; and "one can fairly assume that Parliament had intended the delay prescribed for the payment of the remainder of taxes be the same for all corporations" Ss.28 and 35(1) of the Interpretation Act did not apply because there was a contrary intention as referred to in subsection 3(1) of the Interpretation Act.

Administrative Policy

8 October 2010 Roundtable, 2010-0373701C6 F - Affectation de paiement par l'ARC

final payments for year should be sent with remittance vouchers to reduce misapplications

A cheque received by the CRA can be mistakenly applied to current year instalments rather than to tax payable. How can this be avoided? CRA responded:

[W]e suggest that taxpayers send a remittance voucher with their payment rather than a letter. Those remittance vouchers are personalized, coded with taxpayer information and attached to the statement of account sent, thus ensuring that payments are applied to the correct account and taxation year.

Customized remittance vouchers for businesses can be obtained quickly and easily through the CRA Web site … or through the "My Business Account" service … .

25 January 1991 Memorandum (Tax Window, Prelim. No. 3, p. 31, ¶1108)

An administrative policy permits a reduction in instalment requirements to the extent of tax withheld at source under Regulation 105 on payments made to the taxpayer.

Paragraph 157(1)(a)

Administrative Policy

21 January 2015 Internal T.I. 2014-0540631I7 - S.261 and loss carryback request

instalment method of a functional currency reporter after loss carryback

CRA indicated that it generally will apply the instalment method that minimizes the Canadian dollar taxes payable when it assesses for carried-back losses of a functional currency reporter. See summary under s. 261(11)(a).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 261 - Subsection 261(11) - Paragraph 261(11)(a) CRA applies most favourable instalment method in assessing for carried-back losses of a functional currency reporter 553

Paragraph 157(1)(b)

Cases

Quinco Financial Inc. v. Canada, 2018 FCA 137

GAAR assessment for prior year was payable as at the balance-due date

After rejecting a submission that no interest accrued by virtue of a GAAR reassessment between the balance-due date of a taxation year for which a large capital-loss claim was denied, and the date of the reassessment almost four years later, Webb JA went on to state (at paras 31, 32 and 33):

Section 157 of the Act (which is in Part I) provides that all taxes for a particular year are payable on the balance-due date… .

In this case … [a]s the Part I taxes were payable for the year ended August 27, 2004, these taxes were payable under section 157 by the balance-due date for that year. Therefore, they were outstanding immediately following that date and interest commenced to accrue immediately following the balance-due date and not from the date that the reassessment was actually issued.

Simard-Beaudry … confirmed that “the assessment does not create the debt, but is at most a confirmation of its existence”. This comment is equally applicable to a reassessment arising as a result of the application of GAAR… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 161 - Subsection 161(1) interest is added as usual to a GAAR assessment 308
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) taxpayers do not “apply” GAAR, but GAAR liability accrues before reassessment 260

Administrative Policy

8 March 2018 CBA Commodity Tax Roundtable, Q.13

wire transfers can get lost because of intermediary banks cutting off essential characters

CRA observed that because “intermediary banks often have a limit on the number of characters allowed in [a wire transfer] transaction, so this can result in some essential information being cut off” thereby resulting in difficulties allocating payments from non-residents and others to the correct account – and stated that “Currently, the best way to ensure that a wire transfer is successful is to also send a fax with the account information.”

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 278 - Subsection 278(2) wire transfer account info should be confirmed by fax 174

Subsection 157(1.2)

Paragraph 157(1.2)(a)

Administrative Policy

16 October 2012 External T.I. 2011-0425271E5 F - Small CCPC

carryback of losses can produce small CCPC ("SCCPC") status (quarterly instalments) but not reduce instalment base

A Canadian-controlled private corporation (CCPC), required to pay monthly instalments in respect of a particular taxation year, carried back a non-capital loss (“NCL”) from a subsequent taxation year to the taxation year preceding the particular taxation year ( the "Carryback"), resulting in a reduction of the taxable income for that preceding taxation year to less than $500,000. Does the Carryback affect the frequency of instalment payments for the particular taxation year? CRA responded:

[T]he amount of instalment payments in respect of a particular taxation year for a corporation must remain based on the tax payable regardless of the amount of the “specified future tax consequences” that results from the Carryback of a NCL to the taxation year that preceded the particular taxation year. However, the frequency of instalment payments may be affected by a Carryback where it has the effect of reducing the taxable income of the previous taxation year for a corporation to an amount not exceeding $500,000 and all other conditions set out in subsection 157(1.1) are satisfied.

The effect of amalgamations, windings-up and asset transfers of the CCPC also is discussed. For example:

[T]he amount of the instalments in the first year of taxation of a new corporation that has been created as a result of an amalgamation is calculated on the basis of the tax payable by the predecessor corporations for their last taxation yearn and the new corporation created as a result of the amalgamation may make its instalment payments on a quarterly rather than monthly basis for its first taxation year if all the conditions in subsection 157(1.2) of the Act are satisfied.

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 5301 - Subsection 5301(4) - Paragraph 5301(4)(a) Amalco’s instalments based on tax payable of predecessors 278
Tax Topics - Income Tax Regulations - Regulation 5301 - Subsection 5301(6) - Paragraph 5301(6)(a) flow-through of attributes of wound-up sub 180
Tax Topics - Income Tax Regulations - Regulation 5301 - Subsection 5301(8) - Paragraph 5301(8)(a) 1st instalment base of transferor taken into account by transferee 194