A corporation in financial difficulty that no longer has any tangible property but has a balance of non-capital losses and undeducted scientific research and experimental development expenditures. Because of a debt settlement, s. 80(13) applies. In its financial statements, a future income tax asset is recognized since the parent corporation, following the winding-up of the corporation, will be able to apply such losses and credits in computing its taxable income.
In finding that the future income tax asset is included in the “assets” of the corporation for purposes of s. 61.3(1)(b), CCRA first referred to dictionary definitions of “assets” including an accounting definition referring to:
A component of the balance sheet that describes the economic resources over which the entity has control as a result of past transactions or events, and which are expected to provide future economic benefits.
CCRA then stated:
[S]ubject to subsection 248(24), we are of the view that a future income tax asset presented on the balance sheet of a corporation in accordance with the recommendations of the CICA Handbook constitutes an asset for the purpose of computing Variable B for the purposes of paragraph 61.3(1)(b).