Principal Issues: When is interest chargeable on a section 160 assessment.
Position: Interest is chargeable from the date of the assessment.
Reasons: Paragraph 160(1)(e) of the Act has been amended to override Algoa Trust v. R.
XXXXXXXXXX 2008-028775 Lindsay Frank (613) 948-2227 January 22, 2009
Dear XXXXXXXXXX :
Re: Proposed Subparagraph 160(1)(e)(i) of the Income Tax Act
This is in reply to your letter of July 23, 2008, in which you are seeking a technical interpretation of the above-referenced provision, which is designed to enable the Minister to charge interest on an assessment in respect of property transferred. Specifically, you would like to know whether such interest would be charged from the date of transfer, or from the date of assessment.
The intent of proposed subparagraph 160(1)(e)(i) of the Income Tax Act ("ITA"), as you alluded in your correspondence, is to override the outcome of Algoa Trust v. R., [1998] T.C.J. No. 292, which stands for the proposition that the Minister cannot charge interest on an assessment pursuant to section 160 of the ITA. It is our view that upon Royal Assent, the Minister will be allowed to charge interest from the date of the assessment.
I trust you find this satisfactory.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Business and Partnerships Division
Income Tax Rulings Directorate