Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Payment of Federal Income Tax
Position: Referred to Various Sections of the Act
Reasons: As Requested
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter addressed to XXXXXXXXXX, concerning references in the Income Tax Act to the payment of federal income taxes. XXXXXXXXXX sent a copy of your letter to Mr. Cauchon on September 4, 2001.
Regarding your concern about the time allowed for paying income tax, paragraph 150(1)(d), subsection 156.1(4), and the definition of "balance-due day" in subsection 248(1) of the Act indicate that individuals must pay any balances owing for a given taxation year to the Receiver General for Canada no later than April 30 of the following year.
The Canada Customs and Revenue Agency (CCRA) recognizes, however, that a taxpayer's financial situation may prevent that individual from immediately retiring a tax debt. When that is the case, reasonable allowances are made to enable the individual to pay the liability in a manner that is consistent with his or her financial resources. As the system must also be equitable towards those who pay their taxes when they become due, the CCRA maintains that any arrangement must fully reflect the taxpayer's ability to pay.
The requirement that a taxpayer disclose certain information prior to an extension for payment being granted is not contained in the Act but rather is part of the CCRA's administrative policy for accepting late payments, as contained in Information Circular 98-1R, Collections Policies. As indicated in paragraph two of the circular, the CCRA requests taxpayers to disclose factors such as income, nondiscretionary living expenses, liabilities and capacity to borrow, in order to determine the ability to pay. The exact terms of a payment arrangement may vary with the needs of each taxpayer.
Individuals who are resident in Ontario on December 31 are required to pay provincial income tax in accordance with the provisions of the Act. While there is no provision in the Act requiring an Ontario resident to pay provincial income tax directly to the federal government, under the "tax collection agreement" between the Province of Ontario and the Government of Canada, the province has agreed that the federal government will collect the provincial income taxes and make payments to the province. Recognition of this agreement is contained in Part IV of the Act.
I am attaching, for your convenience, copies of the sections of the Act referred to in this letter, as well as a copy of Information Circular 98-1R.
I trust the information provided is helpful.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
Attachments
Gwen Watson
957-2094
October 19, 2001
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