LATE-FILED FORM RC4616

Section 156 of the Excise Tax Act (ETA) provides for an election to permit closely related corporations and Canadian partnerships to treat the provision of certain intercorporate taxable supplies, while the election is in effect, as having been made for no consideration.

In July 2016, CRA released Policy Statement P-255, Late-Filed Section 156 Elections and Revocations, describing conditions that must be met before they may accept a late-filed Section 156 Election or Revocation using Form RC4616. Consideration of whether to accept a late-filed election or revocation will be made on a case-by-case basis. This policy is effective January 1, 2015.

Among a number of conditions, CRA noted that:

• A written request must be submitted to the Assistant Director of Audit of the Tax Services Office of the first specified member on the Form RC4616. The signed election must accompany the letter.
• The request must provide a clear explanation as to why the election or revocation is late.
• The parties must not have been negligent or careless in complying with Section 156 of the ETA.
• Both specified members must be eligible to make the election as of the requested effective date. The letter should also indicate this.
• As of the requested effective date, both parties must have acted as if the election was made. That is, the supplier must not have charged the GST/HST and the recipient must not have paid the GST/HST in respect of the supplies. Further, all GST/HST returns for both parties to the election must have been filed as required, all amounts owing must have been remitted, and both parties must be fully compliant with the GST/HST legislation.

For further information see VTN Monthly Tax Update Seminar, Issue No. 421

SMALL BUSINESS DEDUCTION (SBD) – REQUIREMENT TO CLAIM?

In a June 20, 2016 French Technical Interpretation (2016-0648481E5, Labarre, Sylvie), CRA confirmed that a corporation eligible to claim the SBD under Subsection 125(1) is not obligated to claim the deduction.

In some cases, a company may prefer to enhance the General Rate Income Pool by forgoing the SBD claim, enabling the corporation to pay out eligible dividends.

For further information see VTN Monthly Tax Update Seminar, Issue No. 421

EMPLOYEE BENEFITS – NEW FOLIO

On July 7, 2016, Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment, was introduced to replace and cancel Interpretation Bulletin IT-470R(Consolidated), Employees’ Fringe Benefits, along with a portion of a few other publications. New information in the Folio include, among others:

• a discussion of tax treatment of benefits by employee- shareholders and the capacity in which the benefit is conferred;
• description of “benefits of any kind whatever”;
• ways a benefit may be conferred and the timing of income inclusion;
• the meaning of the term “primary beneficiary”;
• a discussion of 3rd party benefits and discounts;
• an overview of the exclusion from income for allowances provided to employees at special work sites or remote work locations; and
• a discussion of “reasonable allowances”.

For further information see VTN Monthly Tax Update Seminar, Issue No. 421

TIMING OF MAIL DEEMED RECEIVED BY CRA

Any mail, other than the remittance of an amount withheld or deducted (most often, a source deduction), or a payment by a corporation, sent by first class mail or its equivalent, is deemed to be received by CRA the day it was sent (Subsection 248(7)).

Though Canada Post no longer provides first class mail, CRA has acknowledged that Canada Post “letter mail” would be considered equivalent. In addition, CRA has acknowledged in the same Roundtable Question and IT-433R, Paragraph 4, that an “item entrusted to a courier service for prompt delivery is considered equivalent to first class mail”.

For further information see VTN Monthly Tax Update Seminar, Issue No. 420

AUDIO AND VIDEO RECORDINGS OF FEDERAL GOVERNMENT COMMITTEES

The Government of Canada hosts a website, www.parl.gc.ca/Committees/en/Home, which provides a wealth of information on the various Committees, and Subcommittees, such as the Standing Committee on Finance.

Not only does the website provide details on future and past meetings, members and ongoing work, but it also provides the ability to view the meetings and access the meeting minutes. To access the videos and meeting minutes, users should select the appropriate Committee, then select the requisite area of interest (e.g., Bill C-15, Budget Implementation Act). A listing of meetings and supporting links will appear, such as the option to watch a recording of the meeting and view the meeting minutes.

For further information see VTN Monthly Tax Update Seminar, Issue No. 420