| 19(1) | 5-902249 |
| John Chan | |
| (613) 957-9795 |
October 16, 1990
19(1)
Re: Advance Income Tax Ruling Request Withdrawal (Ruling No. 3-2342) 24(1)
This is in reply to your letter dated August 20, 1990 wherein you enquire whether the laws and regulations allow the Department to enforce payment for the time spent on an advance income tax ruling request when the ruling request is withdrawn.
The Minister of National Revenue was authorized by Order-in-Council P.C. 1983-653 on March 3, 1983 (the "Order") to prescribe the fee to be paid by persons to whom advance rulings were given.
On October 7, 1989, an article entitled "Tax lawyers lose as loophole plugged" in the Globe and Mail reported that some tax lawyers argued that they were not liable for fees when a ruling request was withdrawn because the Order referred to rulings given and no ruling had been issued.
Notwithstanding the literal interpretation relied on by some tax lawyers, it was clearly intended and publicly known that the government was to be reimbursed for every hour spent preparing a ruling and that the right of withdrawal is merely intended to allow the taxpayer to prevent the incurring of further unnecessary costs where the ruling is no longer required or not desired because it would be unfavourable.
The 1983 Order was revoked by P.C. 1989-1949 on September 28, 1989 which authorized the Minister of Nation Revenue to prescribe the fee to be paid by a person to whom a service is provided in respect of a request for an advance income tax ruling. This 1989 Order reaffirmed that "the Governor in Council is of the opinion that the cost of providing a service in respect of a request for an advance income tax ruling should be borne by the person to whom it is provided". (Canada Gazette Part II, Vol. 123, No. 22, page 4470).
It is therefore our view that even if the literal interpretation of the 1983 Order were to prevail and having regard to the publicly known intent of the Order, viz., that taxpayers requesting advance income tax rulings should bear the cost in respect thereof, the recipient of a service in respect of an advance income tax ruling would, as a minimum, be morally obligated to pay for the service.
We believe that the above comments have answered your question about the veracity of the Globe and Mail article.
Yours truly,
Section ChiefResource Industries SectionBilingual Services and ResourceIndustries DivisionRulings Directorate