Fiscal Period

Table of Contents

Cases

Bishay v. MNR, 95 DTC 5619 (FCTD)

The taxpayer filed tax returns for her medical practice showing a December 31 year end and then, shortly before the Minister issued assessments on the basis of these returns, filed amended returns showing a January 1 year end. MacKay J. found (at p. 5622) that "by the act of filing the original income tax returns, the plaintiff adopted a fiscal period for the years in question as indicated on those returns". Accordingly, the taxpayer could not obtain a change to a January 1 year end without the consent the Minister. MacKay J. further found (at p. 5623) that even if the original returns had been submitted by mistake or with a misstated year end, the Court could not require the Minister to accept a change to the January 1 year end adopted in the revised returns.

Matthys v. R., 86 DTC 6385 (Ont. D. Ct.)

A partner of a farming partnership was held to be entitled to include his share of income from the rental of tobacco quotas on a fiscal-year basis, primarily on the basis of paragraph 7 of IT-425.

See Also

Sybron Canada Ltd. v. The Queen, 99 DTC 878 (TCC)

After there was an acquisition of control of a predecessor of the taxpayer ("Holdco") on October 16, 1987 (thereby giving rise to a new taxation year on that date). A return for Holdco was filed for the period October 1, 1987 to September 30, 1988. Later, counsel for the taxpayer prepared and filed three income tax returns for the period October 1, 1987 to October 15, 1987; October 16, 1987 to October 31, 1987; and November 1, 1987 to September 29, 1988 (being one day before the amalgamation of Holdco and another corporation giving rise to their continuation as the taxpayer).

O'Connor TCJ. found that the first single return did not entail an adoption by Holdco of a September 30 year end given that it was erroneous as it included two taxation years, and exceeded 53 weeks.

Administrative Policy

5 January 1995 Income Tax Technical News, No. 6

When a partnership agreement requires that certain expenses incurred by a partner must be paid for by her, RC will require (with effect for such expenses incurred after 1995) that such expenses be deducted on a basis corresponding to the fiscal period of the partnership rather than on a calendar-year basis.

7 September 1994 Memorandum 940625 (C.T.O. "First and Last Taxation Year of a Testamentary Trust")

Discussion of the Szczupak (59 DTC 119) decision, and reference to the dictionary meanings of "accept" and "adopt".

25 March 1994 External T.I. 5-932996 -

The taxation year of a branch will not be considered to have ended on the date that the assets of the branch are transferred to a Canadian corporation under s. 85(1). The narrow application of s. 115(4) lends support to this interpretation.

93 C.R. - Q. 20

A corporation's first fiscal period will commence on the day of incorporation rather than on the later day on which it commences operations.

89 C.R. - Q.40

RC will normally allow a joint venture to establish its own fiscal period which may differ from the fiscal period of each joint venture. "This administrative position is intended to apply primarily to the situation where the participants in a joint venture have different fiscal periods or where the participants have the same fiscal period but valid business reasons which justify a separate fiscal period for the joint venture ... Where the joint venture owns only one asset, the disposition of that asset may cause the dissolution of the joint venture. The fiscal period of the joint venture would end at any time that dissolution occurred."

89 C.P.T.J. - Q12

Where two corporations with calendar year-ends amalgamate on July 1, 1989, and retain calendar year reporting for securities and financial statement purposes, the new company nonetheless will have a June 30 year-end for taxation purposes, and should ensure that the T2 is completed in every respect, including financial statements for the year ending June 30.

89 C.M.TC - Q.15

RC's administrative position on fiscal periods for joint ventures is intended to apply where the participants have different fiscal periods, or the same fiscal period and valid business reasons justifying a separate fiscal period for the joint venture. The fiscal period terminates when all property of the joint venture has been disposed of.

25 July 1989 T.I. (Dec. 89 Access Letter, ¶1064)

A corporation's first fiscal period cannot exceed 53 x 7, or 371, days, from the date of incorporation.

27 July 1989 T.I. (Dec. 89 Access Letter, ¶1065)

Where a corporation had adopted a fiscal period ending June 30 and proposes to change its year-end for financial reporting purposes to September 30 but to continue filing its tax returns on the basis of the original fiscal period of June 30, there is no need for the concurrence of the Minister with the accounting year-end change.

IT-179 "Change of Fiscal Period"

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