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Permissive Deductions

Permissive Deductions (Fuscalite · CRA restricts taxpayer requests to revise permissive deductions) — "CRA has issued a new Circular to replace Information Cir…

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  • CRA's new Circular replaces two earlier Information Circulars and clarifies reassessments and deductions.
  • The new Circular replaces Information Circular IC75-7R3, Reassessment of a Return of Income.
  • The new Circular also replaces Information Circular IC84-1, Revision of CCA Claims and Other Permissive Deductions.
  • Both replaced Information Circulars were dated July 9, 1984.
  • Permissive deductions include deductions that CRA identifies as adjustable in the relevant context.
  • CCA is an example of a permissive deduction.
  • SR&ED deductions are examples of permissive deductions.
  • CEE, CDE and COGPE deductions are examples of permissive deductions.
  • Deductions not considered permissive include amounts that reduce taxable income rather than net income.
  • Charitable donations are not considered permissive deductions.
  • Tax credits and reserves are not considered permissive deductions.
  • The capital gains reserve under s. 40(1)(a)(iii) is an example of a non-permissive reserve.
  • A TPR seeks to revise the amount of a reserve claimed in a particular taxation year.
  • The revision is not permitted when the reserve was based on a reasonable amount at the time it was claimed.
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Permissive Deductions

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"CRA has issued a new Circular to replace Information Circular IC75-7R3 Reassessment of a Return of Income and Information Circular IC84-1 Revision of CCA Claims and Other Permissive Deductions, both dated July 9, 1984.\n\nCRA refers to examples of permissive deductions as including CCA, SR&ED deductions and CEE, CDE and COGPE deductions; whereas deductions that are not considered permissive include charitable donations or other amounts that reduce taxable income rather than net income, tax credits and reserves, such as the capital gains reserve under s. 40(1)(a)(iii).\n\nA TPR to revise the amount of a reserve claimed in a particular taxation year will not be permitted if the reserve was based, at the time it was claimed, on what was considered to be a reasonable amount."

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