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.
MINISTER/DM'S OFFICE 96-01271M
ADM'S OFFICE
RETURN TO INCOME TAX RULINGS
AND INTERPRETATIONS DIRECTORATE
15th Floor, Albion Tower
April 17, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to your facsimile of February 15, 1996, addressed to the Honourable David Anderson, former Minister of National Revenue, concerning the proposed elimination of the deferral of tax on business income and the deadline for making contributions to a registered retirement savings plan (RRSP).
The role of Revenue Canada is to administer and enforce the Income Tax Act as passed by Parliament. Your concerns about the fairness and the impact of the proposal on businesses relate to tax policy, which is the responsibility of the Department of Finance. I have therefore forwarded a copy of your letter to Mr. David A. Dodge, Deputy Minister of that department.
I would mention that in a press release issued on July 19, 1995, the Honourable Paul Martin, Minister of Finance, announced that the government had consulted with taxpayers and their elected representatives concerning this particular proposal. As a result of these consultations, several modifications were incorporated in the draft legislation that was released at that time. In response to the concerns of taxpayers who have valid non-tax reasons for having an off-calendar fiscal period, Mr. Martin announced that the government would provide an alternative method of calculating income. This alternative method, which permits eligible taxpayers to have off-calendar fiscal year-ends, remains consistent with the policy of eliminating the deferral of income for tax purposes. The proposal to implement this alternative method was part of the legislation contained in the Ways and Means Motion that Mr. Martin tabled in the House of Commons on December 12, 1995.
In your correspondence, you also expressed concern regarding the lack of published information on this topic. To assist taxpayers in filing 1995 income tax returns, Revenue Canada has recently published the guide, Tax Changes Relating to the 1995 Fiscal Year End. I am pleased to enclose a copy of this guide for your information and I apologize for any inconvenience you may have experienced previously in obtaining a copy. However, as the draft legislation had been released to facilitate consultation with taxpayers and did not include the alternative method, it was impractical to issue a guide on this topic until after the final legislation was tabled in the House of Commons.
With respect to RRSP contributions, I would explain that to be deductible in computing an individual's taxable income for a taxation year, contributions to an RRSP may be made on or before the day that is sixty days after the end of the year. Generally, this allows for RRSP contributions to be made based on estimated income, as any contributions made in the first sixty days of a year may be claimed in the preceding year or in the year of payment, should actual earned income for the preceding year be less than estimated.
Thank you for bringing your concerns to the Department's attention.
Yours sincerely, Pierre Gravelle, Q.C.
Attachment
C.C. Mr. David A. Dodge
Deputy Minister of Finance
Bill Kerr
957-2139
April 9, 1996