Principal Issues: [TaxInterpretations translation]
Do taxpayers who filed their federal tax returns before the bill was assented to on February 22, 2007, have to file an amended return to claim the apprenticeship job creation tax credit?
Position:
Amendment to our letter number 2007-022861. They will be required to file Schedule T2SCH31 or Form T2038(IND) by the deadline referred to in paragraph 127(9)(m) of the definition of ITC, which is one year after the claimant's filing-due date for the year in which a taxpayer's apprenticeship expense was incurred.
Reasons:
Application of paragraph 127(9)(m) of the definition of ITC
2007-025262
XXXXXXXXXX A. Dagenais,
Advocate, M. Fisc
September 26, 2007
Dear Madam,
Subject: Apprenticeship Job Creation Tax Credit (AJCTC)
This is a follow-up to our letter of May 22, 2007, no. 2007-022861, in which we commented on the AJCTC.
We have amended the last paragraph of our May 22, 2007, letter regarding whether taxpayers who filed their federal tax returns before the bill was assented to on February 22, 2007, had to file an amended return to take advantage of the AJCTC. We inadvertently stated: [TaxInterpretation translation]
The CRA will apply this new provision in respect of previously assessed taxation years in the ordinary manner set out in Information Circular 75-7R3, i.e., to any request for reassessment that is made in respect of a taxation year that is not statute-barred and subject to the other conditions set out in that Circular. Accordingly, the CRA will apply the discretionary power provided in subsection 152(4) according to the guidelines set out in the Circular. Therefore, a taxpayer must satisfy five conditions before the CRA will agree to reassess a refund.
In this regard, we are of the view that employers will be able to claim the credit on their income tax return using Form T2038(IND), Investment Tax Credit (Individuals) or Schedule T2SCH31, Investment Tax Credit - Corporations. The prescribed forms must be completed and filed by the taxpayer with the Minister within the time limit referred to in paragraph 127(9)(m) of the definition of investment tax credit ("ITC"). Under paragraph (m) of the definition of ITC in subsection 127(9), the filing deadline for Schedule T2SCH31 or Form T2038(IND) is the day that is one year after the claimant's filing due date for the year in which an apprenticeship expense of the taxpayer was incurred. ZX
Consequently, where a tax return was filed without an application for the AJCTC, it would have been assessed without taking this tax incentive into account. Subsequently, where the claimant completes a Schedule T2SCH31 or Form T2038(IND) containing all the relevant prescribed information before the filing deadline, the claimant must amend the tax return in order for the claim to be processed by the CRA.
These comments are not advance income tax rulings and do not bind the CRA with respect to any particular factual situation.
Best regards,
Louise J. Roy, CGA
Interim Manager
Business and Partnerships Division
Income Tax Rulings Directorate.