SUBJECT: Validity of Price Adjustment Clause
Principal Issues: Confirmation of CRA position regarding validity of price adjustment clause as expressed at the 2007 APFF congress.
Position: Previous position confirmed.
FEDERAL TAX ROUNDTABLE 7 OCTOBER 2011
APFF CONFERENCE 2011
Question 23
How to apply a price adjustment clause
At the 2007 APFF conference during the Federal Taxation Roundtable, the CRA stated the following:
“It appears to us that the validity of a price adjustment clause does not depend on the filing of an amended election (on prescribed form T2057) pursuant to subsection 85(7.1) of the ITA.”
The CRA added:
“The CRA's position stated in paragraph 26 of Information Circular 76-19R3 will be revised at the first opportunity in order to clarify its scope.”
Since this CRA position in paragraph 26 of Information Circular 76-19R3 has not yet been revised, can the CRA reaffirm its position that the validity of a price adjustment clause does not depend on the filing of an amended election, contrary to the wording of paragraph 26 of Information Circular 76-19R3?
CRA Response
Despite the fact that paragraph 26 of Information Circular 76-19R3 has not yet been amended, our position that the validity of a price adjustment clause does not depend on the filing of an amended election (on prescribed form T2057) pursuant to subsection 85(7.1) of the ITA is still in effect.
Jelena Pajkovic
(613) 941-0782
2011-041211