Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
March 24, 1995
Audit Programs DivisionResource Industries
Mara Praulins Section
A/ChiefA.A. Cameron
Specialized Audit Programs Section 957-8975
Attention: Jack Hoye
950579
Subsection 66(12.75) of the Income Tax Act (the "Act")
This is in reply to your memorandum of March 1, 1995 wherein you requested our views concerning the interpretation of the provisions of the above subsection of the Act in a situation involving the filing (during 1994) of the prescribed form referred to in subsection 66(12.68) of the Act, a T100, along with the related selling instrument or agreement, after the date specified in the latter subsection. This matter was previously discussed with Mr. Hoye during telephone conversations with various personnel from this Section.
Pursuant to subsection 66(12.74) of the Act, certain "documents" (being those referred to in five specified subsections of the Act, including subsection 66(12.68) thereof), may be "deemed to have been filed" on a particular earlier day, while pursuant to subsection 66(12.741) thereof, certain amounts (being those purported to have been renounced under four specified subsections of the Act) may be "deemed to have been renounced" at the end of a particular earlier period of time, in both cases for the purposes specified therein. However, in each case payment of a penalty is a prerequisite to the respective "deemed" result.
Pursuant to the preamble to subsection 66(12.75) of the Act, the penalties provided therein are in respect to either the late filing of a document (being a document referred to in one of the five subsections of the Act specified in subsection 66(12.74) thereof) or in respect of a particular renunciation (being a renunciation under one of the four subsections of the Act referred to in subsection 66(12.741) thereof). Subject to the $15,000 upper limit stated in the preamble to subsection 66(12.75) of the Act, the penalty under that subsection "in respect of the late filing of a document" is to be determined under either paragraph (a) or (b) thereof (depending upon the subsection of the Act in which the filing of such document is referred to) while the penalty thereunder "in respect of a renunciation" relevant for these purposes is to be determined under paragraph (c) thereof. As discussed with Mr. Hoye, the reference in paragraph 66(12.75)(c) of the Act to "subsection (12.74)" should be to "subsection (12.741)". This view is supported by the above discussion of the relevant provisions as well as by the Explanatory Notes issued by the Department of Finance in February of 1994. Mr. Hoye has indicated that he has already brought this anomaly to the attention of a representative of the Current Amendments and Regulations Division.
Since the situation at hand concerns the late filing of documents referred to in subsection 66(12.68) of the Act, we agree with Mr. Hoye's view that the penalty determined under subsection 66(12.75) thereof would be calculated with reference to paragraph (a) of that subsection. As noted in Mr. Hoye's memorandum, subparagraph 66(12.75)(a)(ii) of the Act refers to "1/4 of 1% of the maximum amount in respect of...expenses renounced or attributed or to be renounced or attributed as set out in the document". It is also our opinion that, in a situation such as the one at hand where a T100 and related selling instrument required to be filed under subsection 66(12.68) of the Act are being late filed, this wording supports Mr. Hoye's view that the penalty under subsection 66(12.75) of the Act should be calculated with reference to the "maximum amount" which may "be renounced or attributed as set out in the" T100 and related selling instrument.
Please contact the writer if you have any further questions.
Acting Chief
Resource Industries Section
Manufacturing Industries, Partnerships
and Trusts Division
Rulings Directorate
Legislation and Policy Branch
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