Principal Issues: [TaxInterpretations translation] When is a taxpayer "entitled to receive" the amount of the Quebec investment tax credit for manufacturing and processing equipment ("the Credit")?
Position: If a taxpayer has incurred eligible expenses for the purposes of section 1029.8.36.166.43 of the Quebec Taxation Act in a taxation year, we are of the view that the taxpayer will be entitled to receive the Credit at the end of that taxation year.
Reasons: Under our understanding of the administration of the Credit which is the responsibility of the Ministère du Revenu du Québec, the prescribed form is not be considered as an important condition for obtaining the Credit.
XXXXXXXXXX 2010-038901 J. Gibbons
September 6, 2011
Dear Sir,
Subject: Application of subsection 13(7.1) of the Income Tax Act (the "Act").
This is in response to your letter of November 30, 2010, in which you have asked for our opinion on the above subject. In particular, your questions relate to the findings we made in document number 2009-0350241E5 (our “Opinion") which dealt with the question of when a taxpayer "is entitled to receive" the amount of the investment tax credit for manufacturing and processing equipment in Québec (the “Credit") for the purposes of subsection 13(7.1) of the Act. That credit is provided for in section 1029.8.36.166.43 of the Québec Taxation Act (the "QTA").
Unless otherwise indicated, all statutory references herein are to the provisions of the Act.
In your letter, you expressed the opinion that you do not agree with our Opinion that a taxpayer is entitled to receive the Credit at the end of its taxation year. On the contrary, you are of the opinion that a taxpayer is not entitled to receive the Credit when it has not filed the prescribed form.
Our Comments
As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is our practice not to issue a written opinion regarding proposed transactions otherwise than through advance rulings. Furthermore, when it comes to determining whether a completed transaction has received adequate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you.
The question of when a taxpayer is entitled to receive a credit or other form of government assistance for the purposes of subsection 13(7.1) is a question of fact that requires a review of all the conditions on which the claim is based. In this case, based on our understanding of the administration of the Credit, which is the responsibility of the Ministère du Revenu du Québec, the prescribed form is not considered as an important condition for obtaining the Credit. Accordingly, as discussed in our Opinion, if a taxpayer incurred eligible expenses for the purposes of section 1029.8.36.166.43 of the QTA in a taxation year, we are of the view that the taxpayer will be entitled to receive the Credit at the end of that taxation year.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate