Quebec and Ontario travel agents were required by provincial legislation to hold funds collected from clients for services to be rendered to them in a trust account, and also, in their year end balance sheets, reported the current balances in the trust accounts as assets and also as deferred-revenue liabilities. CRA stated:
The term "advance" is not defined in the Act. It is our view that this term includes an advance payment. Funds received from clients and placed in trust under the Quebec and Ontario legislation referred to above are, in our view, prepaid and advances for the purposes of the definition of capital in subsection 181.2(3).