When an individual residing in Québec left Canada during 2002, the Part I tax payable for the year was $190,000, net of provincial abatement, but would have been only $100,000 if s. 128.1(4) had not applied. The individual made instalments for that year totalling $110,000. The provincial tax abatement was the only amount deemed to be tax paid for the year under element C of the formula in s. 220(4.5)(a)(i). The individual made the s. 220(4.5) election and provided sufficient security for the maximum amount permitted by the security for departure tax rules, being $90,000. What is the amount of the refund of overpaid instalments that the individual will receive? CRA stated:
[T]he provision of sufficient security does not constitute a payment. Thus, we have concerns with the technical treatment of the amount of sufficient security provided for the purposes of section 164 because of the wording of subsections 164(7) and 220(4.5) to 220(4.54). It should be noted that the presumption in paragraph 220(4.5)(b), providing in certain circumstances that the amount for which sufficient security is accepted is a paid amount, does not apply for the purposes of subsection 164(7). …
[However] in the hypothetical situation described above, the individual could benefit from a refund of overpaid instalments of $10,000 for the individual’s 2002 taxation year.