Section 181.4

The FAS 143 US accounting standard would require some businesses to recognize a liability corresponding to the estimated future costs to be incurred to restore certain sites, with such amount both recorded as a liability, and increasing the carrying value of the asset.

After noting that US accounting standards can potentially fill in gaps not covered by the CICA Handbook, CCRA stated:

If the carrying value of such an asset is increased in the financial statements as a result of the application of U.S. FAS 143 and if U.S. FAS 143 is GAAP, the CCRA is of the view that the amount required to be included in the corporation's taxable capital pursuant to paragraph 181.4(a) is the amount shown in the financial statements prepared in accordance with GAAP that will take into account the required increase.

After paraphrasing s. 181.4(a), CCRA stated:

[A] future income tax asset of a corporation is not an asset of the corporation "used … or held" by it and is not included in the taxable capital employed in Canada of a corporation for the purposes of section 181.4 ... .