Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
whether a return filed to obtain credits is filed under section 150 of the Act
Position:
Yes, unless filed under other provision in Part 1 which will permit credits (most or all others do not such as a Part 1 return filed 70(2), 104(23), para 128(2)(e) or ss 150(4))
Reasons:
must view legislation for each credit. Example: CTB provisions define a "return of income" as a return filed or required to be filed under Part 1. Those returns filed under 70(2) etc. as listed above cannot claim the CTB.
March 18, 1998
XXXXXXXXXX
Dear XXXXXXXXXX:
I am replying to your letter of January 9, 1998, in which you ask for the statutory reference which provides that a return filed to obtain certain tax credits is necessarily filed under section 150 of the Income Tax Act. You have also queried why some taxpayers, who are reassessed to include income amounts, are not penalized.
The specific provisions for each credit or benefit, such as section 122.5 for the Goods and Services Tax Credit and section 122.6 for the Child Tax Benefit, determine under what provision a return of income can or must be filed in order to qualify for the particular credit or benefit. For example, a Child Tax Benefit can ordinarily only be paid when an individual has filed an income tax return for the year and, in some circumstances, when the person's cohabiting spouse has also filed. A "return of income" is specifically defined for the purpose of this credit and means, when the individual was resident in Canada throughout the year, the individual's return that is "filed or required to be filed" under Part 1 of the Act for the year. The definition refers to returns which are statutorily required to be filed as well as those which would not, but for the purpose of obtaining the credit, otherwise be required to be filed. To meet the requirement that the return be filed under Part 1, it is necessary that the return be filed under a provision contained in Part 1, in order to qualify for the credit. While there are a number of provisions, including section 150, which permit the filing of returns under Part 1 of the Act, the definition of "return of income" for purposes of the Child Tax Benefit (and for the GST credit) excludes from its meaning returns filed under Part 1 provisions other than section 150. This means, for example, that a return filed for a deceased taxpayer in respect of certain types of income or a return filed for a bankrupt person would not be eligible to receive the Child Tax Benefit or the Goods and Services Tax Credit.
It is true that some taxpayers may be reassessed to include in income an amount not previously reported and that no penalty will be levied. For example, a penalty under subsection 163(1) will not be levied for a first omission of income. This is so because the penalty only applies when there has been a second omission within a three year period. Department officials follow operational guidelines in determining when and in what circumstances a penalty under subsection 163(1) is appropriate.
I hope that these comments explain more fully the Department's position in these matters. However, should you have further questions, you may contact Sandra Short, Income Tax Rulings and Interpretations Directorate, at (613) 957-8953.
Yours sincerely,
Denis Lefebvre Assistant Deputy Minister Policy and Legislation Branch
Sandra Short
957-2136
February 25, 1998