Principal Issues: [TaxInterpretations translation]
When is a taxpayer "entitled to receive" the Quebec Taxation Act (QTA) capital tax credit?
Position:
The taxpayer is entitled to receive the amount of the credit that does not exceed the capital tax otherwise payable for the year, at the end of its taxation year.
Reasons: Interpretation based on analysis of relevant legislation and case law.
XXXXXXXXXX 2007-023468 Nancy Turgeon, CGA November 6, 2007
Dear Sir,
Subject: Quebec capital tax credit
This is in response to your fax of May 3, 2007, asking when the Quebec capital tax credit should be recognized.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (the "Act").
As set out in Technical Interpretation 2006-021264, it is our view that the capital tax credit is government assistance in respect of the acquisition of depreciable property. The capital cost of the depreciable property, which gave rise to the credit, at a particular time must be reduced pursuant to paragraph 13(7.1)(f) by the amount of assistance that the taxpayer received or is entitled to receive before the particular time.
For the purposes of paragraph 13(7.1)(f), it must be determined whether at the end of the taxation year the taxpayer is entitled to receive the credit before that time, if not already received. The term "entitled to receive" is not defined in the Act. According to the jurisprudence, an amount is receivable when a taxpayer has an absolute entitlement to receive it, even though it is not necessarily due. In order to be "entitled to receive" an amount, it must be shown that the conditions on which the claim is based are satisfied. According to our understanding of the credit in section 1135.1 of the QTA, a taxpayer is entitled to receive the amount of the credit, not exceeding the capital tax otherwise payable for the year, at the end of its taxation year. However, the taxpayer will not be entitled to receive the portion of the credit that is carried forward to a subsequent taxation year.
These opinions are not advance income tax rulings and, as stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, are not binding on us.
Best regards,
Louise J. Roy, CGA
Interim Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate.