Customers of the corporation paid for services in advance, which the corporation showed as a liability on its balance sheet but deducted as a reserve in computing its income pursuant to s. 20(6). In finding that such amounts were not a reserve described in s. 181.2(3)(c), and before finding that they were includible in taxable capital pursuant to s. 181.2(3)(b), the Directorate stated:
[W]here a term in Part I.3 is derived essentially from accounting nomenclature, such as reserves, allowances, allocations and other surplus, the accounting treatment of the item in question will be used to decide whether the item is included in the capital calculation. On the other hand, the Agency is of the view that the legal form should continue to be considered with respect to items that are to be included in the capital calculation as loans, advances or debts.
Based on this proposition, we are of the view that the amounts in dispute do not constitute reserves for accounting purposes, nor do they fall within the definition of "reserves" as set out in subsection 181(1).