Words and Phrases - "receivable"

a
88
b
44
c
80
d
54
e
38
f
31
g
20
h
14
i
74
j
2
k
2
l
32
m
56
n
25
o
38
p
81
q
3
r
77
s
90
t
47
u
16
v
9
w
23
y
2

5 January 2001 Internal T.I. 2000-0053767 F - IT-92R2 Paragraphe 1

Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b)
construction holdbacks not receivable until approved for release

In finding that construction holdbacks by a subcontractor did not become receivable until their release was approved by the architect or engineer, the Directorate stated:

A right to receive an amount exists where the vendor has an absolute, but not necessarily immediate, right to be paid. This absolute right exists when all the suspensive conditions of a contract are satisfied. A suspensive condition is an event (beyond the vendor's control) that suspends the performance of the contract (such as the right to be paid in the case of a holdback) until the condition is satisfied or waived and which could void the contract from the outset if the condition is not satisfied or waived. We understand that holdbacks are refundable only when all work has been satisfactorily completed. Consequently, we are of the view that such holdbacks will constitute amounts receivable when a client's architect or engineer has confirmed that the work performed by the Taxpayer is satisfactory.

Words and Phrases
receivable
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Timing progress method per IT-92R2 could be used by supplier of kitchen equipment if installed by it pursuant to the building construction plans and title thereto thereupon vested in the building owner 315

20 December 2002 External T.I. 2002-0164735 F - PRODUIT DE DISPOSITION ACHALANDAGE

Summary Under
Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Cumulative Eligible Capital - Variable E
full potentially receivable amount must be recognized, notwithstanding subsequent possible downward adjustment

On a sale of the business of a pharmacist, the goodwill value of $750,000 (payable in 72 equal monthly instalments) is based on the number of prescriptions sold over a 12-month period multiplied by a set amount per prescription. However, this amount would be reduced, if the operation of the dispensary were to cease due to non-renewal or termination of the lease by the lessor before the sixth anniversary of the sale, by an amount equal to 1/72 of such purchase price for each such month before the 6th anniversary of the sale. CCRA stated:

The expression "has or may become entitled to receive" is not defined in the Act. According to the jurisprudence, an amount is receivable when a taxpayer has a definite right to receive it, even if it is not necessarily due. To be "entitled to receive" an amount, one must show that the conditions on which the claim is based have been satisfied. Adding the words "may become" to this expression broadens its scope, since it refers to the possibility of someone meeting the conditions necessary for a claim in the future.

… [T]he pharmacist may become entitled to receive the full price of the goodwill, in your example $750,000, so that the taxpayer must include this full amount under paragraph (a) of Variable E of CEC in the taxation year of the sale of the goodwill. …

CCRA went on to note that if there was a subsequent downward adjustment to the purchase price, a corresponding deduction generally would be available under s. 24(1)(a).

Words and Phrases
receivable
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) s. 12(1)(g) applicable to incremental pharmacy sales price for goodwill based on volume of prescriptions for post-sale years 110

9 July 2003 External T.I. 2003-0183675 F - VENTE D'UNE LISTE DE CLIENTS

Summary Under
Tax Topics - Income Tax Act - Section 24 - Subsection 24(1)
loss under s. 24(1)(a) where maximum sales price (equaling FMV) for sold client list is not achieved

In one of the alternative scenarios for the sale of the client list of a retiring professional, the sale price is 25% of the fees earned over the next four years from the transferred clients, but with a $400,000 maximum amount (and no minimum).

CCRA indicated that s. 12(1)(g) would not apply if the $400,000 maximum amount equals the fair market value of the property at the time of the sale, even though this maximum may subsequently be reduced in the event that the total fees collected over the four years do not reach this maximum. In this situation, s. 14 would apply, so that the $400,000 sale price would be included in para. (a) of E of the CEC in the taxation year of the sale of the client list, given that there is a possibility that the vendor may be able to claim this amount. If (in the 4th year) a definitive reduction in the sale price becomes established, the CEC will become positive and, if the taxpayer no longer owns eligible capital property and has ceased carrying on the business, s. 24(1)(a) would allow the taxpayer to deduct the CEC.

Words and Phrases
receivable
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) application of s. 12(1)(g) only to excess participating sales price for client list over minimum, or where there is a maximum equaling the client list’s FMV 369

Midwest Oil Production Ltd. v. The Queen, 82 DTC 6092, [1982] CTC 107 (FCTD), aff'd 83 DTC 5304, [1983] CTC 338 (FCA)

Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(o)

Because the word "receivable" relates to a change in custody or possession, not to a change in ownership, a royalty obligation to deliver crude oil to the Alberta government (or its agent) that already belonged to it gave rise to an amount being receivable by it. The amount receivable is not reduced by available Alberta drilling incentive credits.

Because s. 12(1)(o) taxes the producer, not the (Alberta) owner, of the petroleum, it does not contravene the constitutional prohibition against the taxation of provincial property.

Words and Phrases
receivable

MNR v. Colford Contracting Co. Ltd., 60 DTC 1131, [1960] CTC 178 (Ex Ct), briefly aff'd 62 DTC 1338, [1962] CTC 546 (SCC)

Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b)
amount is receivable when an absolute, although not necessarily immediate, right to receive

Holdbacks on contracts for the installation of heating and plumbing systems became "receivable" when the architect's or engineer's certificates were executed, thereby resulting in an absolute entitlement of the taxpayer to receive the holdbacks at a later due date. "[I]t is not enough that the so-called recipient have a precarious right to receive the amount in question, but he must have a clearly legal, though not necessarily immediate, right to receive it."

Words and Phrases
receivable
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Timing 25

Wilson and Wilson Ltd. v. MNR, 60 DTC 1018, [1960] CTC 1 (Ex Ct)

Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b)

Cameron, J. held that the full amounts covered by interim progress certificates of the supervising engineer became "receivable" for the purposes of the application of s. 85B(1)(b) to long-term sewer installation contracts having a fixed price per lineal foot of work done, notwithstanding that 10% of the amounts covered by the interim certificates were required to be held back until the time that the project was certified to have been completed. "Parliament has extended somewhat the ordinary concept of 'income' in relation to a business in which property is sold or services rendered and ... every amount to be received in respect of property sold or services rendered in the course of the business in the year shall be included notwithstanding that the amount is not to be received until a subsequent year ..."

Words and Phrases
receivable