19 February 1991 Income Tax Severed Letter

903012
                                   L. Holloway
                                   (613) 957-2104

February 19, 1991

          19(1)Re:  Interaction of Alternative Minimum Tax/Logging Tax Credit

Further to our recent telephone conversation, we are writing to set out our views on this matter.

While it is not our jurisdiction to interpret provincial legislation, we recognize that the provincial logging tax is interdependent on federal logging tax credit legislation. We therefore offer the following comments with respect to the interpretation of the federal Income Tax Act.

The Part I tax and minimum tax calculations are independent calculations. The fact that the operation of minimum tax would, in some cases, eliminate or reduce the advantage to a taxpayer of making a claim for a federal logging tax credit does not, in our opinion, indicate that this credit is not allowable. On the contrary, it is allowable in calculating tax payable pursuant to Division E regardless of whether or not it is relevant in bringing tax payable pursuant to Division E to a figure less than that payable as minimum tax pursuant to Division E. 1.

We trust these comments are of assistance. We have advised the party making enquiries with us to consult with your office for an interpretation of British Columbia Logging Tax Legislation.

                                                           000286

for Director Business and General Division Rulings Directorate Legislative and Intergovernmental; Affairs Branch