Advance income tax rulings

An advance income tax ruling is a written statement given by the Directorate to a taxpayer stating how the CRA will interpret and apply specific provisions of existing Canadian income tax law to a definite transaction or transactions which the taxpayer is contemplating. Accordingly, an advance income tax ruling may be either favourable or unfavourable to the interpretation desired by the taxpayer. Where, however, an unfavourable advance income tax ruling is to be issued, the taxpayer is given the opportunity to withdraw the ruling request.

Requests for advance income tax rulings will be acknowledged within two weeks of receipt. The acknowledgement will provide a contact name and reference number, and will identify any additional information required to process the request. Our goal is to respond to requests as soon as possible. Priority is given to advance ruling requests, while interpretations are dealt with on a first-come-first-served basis. Higher priority on any particular request may be given when justified, and the status of a request is available on demand. Our goal is to issue rulings within an average of 60 days of controllable time.

The provision of advance income tax rulings is an administrative service and there is no legal requirement to issue them. The Income Tax Rulings Directorate does, however, consider all requests for advance income tax rulings unless exclusions apply.

Note
The purpose of the advance income tax ruling service is to promote voluntary compliance, uniformity and self-assessment by providing certainty with respect to the income tax implications of proposed transactions.

The cost of providing the advance income tax ruling service is borne by those taxpayers who benefit from it. Accordingly, the CRA charges a fee for time spent in connection with advance income tax ruling requests, including those requests which are subsequently withdrawn.

The fee is set by Order in Council. Currently, the fee is $100 (plus GST) for each of the first 10 hours or part of an hour and $155 (plus GST) for each subsequent hour or part of an hour spent on the ruling request.

An advance payment equal to five hours of work plus GST ($535.00) is required. This advance payment is applied against the amount charged for the advance income tax ruling. If the time billed is less than five hours, the Directorate will refund the excess portion of the advance payment.

The Directorate may bill interim fees prior to completion of the ruling request and will bill any additional amount payable after the ruling is completed or the ruling request is withdrawn. This will be the case whether or not the ruling given or proposed is favourable to the taxpayer. However, if we refuse to issue an advance income tax ruling, the taxpayer will generally not be charged any hours expended and the advance payment will be refunded.

Interest on overdue accounts will be charged. If either the representative or the taxpayer has an overdue account for a previous ruling and either of them requests another advance income tax ruling, the representative or the taxpayer will be advised that payment of any outstanding balance of prior fees has to be received before the new ruling is assigned or the response to the new ruling request is released.

The fee charged for the advance income tax ruling service is intended to recover costs, and the Directorate will from time to time review the amount of the fee to ensure that it is appropriate. When increased costs necessitate a fee change, a recommendation will be made for revision of the existing fee by Order in Council. If such a change is approved, the new fee will be published.

Forms and publications

• Consent to release an advance income tax ruling to the public
• Authorization for email and facsimile transmision
• IC70-6R5 Advance Income Tax Ruling