| 19(1) | File No. 5-9400/5-7423 |
| D.J. Lightheart | |
| (613) 957-8953 |
January 23, 1990
Dear Sirs:
We are writing further to our letter to you dated March 7, 1989 concerning subsection 153(4) of the Income Tax Act ("Act"). We have completed our discussions with our District Offices and are now able to report our findings to you.
You enquired as to whether the application of subsection 153(4) is altered by a taxpayer's inclusion of unclaimed dividends, interest or proceeds of disposition in accounting income for financial reporting purposes.
As previously indicated in our letter of October 25, 1988, the person beneficially entitled to the amount retains his right to the amount and the amount would remain a liability of the taxpayer. Therefore, in our opinion the better view is that such amounts would not be included in the taxpayer's income under section 9 of the Act. Accordingly, if such amounts are included in accounting income (either the gross amount or an amount net of tax payable under subsection 153(4)), they should not be included in the computation of the taxpayer's income for the particular taxation year. The unclaimed amounts should only be taxed under subsection 153(4).
We hope that the foregoing will be of assistance.
Yours truly,
F. Lee Workman for DirectorFinancial Industries DivisionRulings Directorate