See Also
Williams Gold Refining Co. of Canada Ltd. v. The Queen, 2000 DTC 1829, Docket: 96-4709-IT-G (TCC)
The value of services provided by employees of the taxpayer to assist a sister company represented revenues notwithstanding that the amounts (which ultimately proved uncollectible) were inappropriately deducted from the taxpayer's wage expense for the year rather than recorded as revenue.
Administrative Policy
1 September 2015 Memorandum 2013-0507381I7 - Transfer pricing adjustments and gross revenue
CRA considered that an upward adjustment under s. 247(2) to a Canadian resident’s sales proceeds – but not a downward adjustment to its purchase price for goods – increased its gross revenue for provincial income allocation purposes. See summary under Reg. 402(3).
31 March 2014 Memorandum 2013-0514921I7 - Meaning of "gross revenue" follow-up
Should amounts received or receivable as volume discounts should be included in a corporation's "gross revenue" for purposes of Reg. 402(3)? After noting "that taxpayers tend to treat gross revenue to mean revenue for financial statement purposes" and "that, for financial statement purposes, rebates and volume discounts are deducted from the cost of purchase," stating that the "truer picture" doctrine in West Kootenay Power, 92 DTC 6023 and Canderel, 98 DTC 6100 was "not determinative of the issue because gross revenue is specifically defined in the Act, whereas profit and loss are not," and noting that "using financial statement revenue would potentially render paragraph (b) of the definition of gross revenue meaningless," CRA stated that "gross revenue for the purposes of Part IV of the Regulations includes all amounts received or receivable by a taxpayer, other than on account of capital, but does not include amounts received in respect of expenditures of the taxpayer." Respecting the latter exclusion, CRA referred specifically to:
- "amounts received or receivable on account of a taxpayer's expenditures, such as volume rebates, received by the taxpayer because these are adjustments to amounts of expenditures as opposed to receipts in respect of income-earning activities;
- financial assistance received by the taxpayer from a government in respect of expenditures incurred or to be incurred by the taxpayer;"
This represents a "change in position on the meaning of gross revenue for purposes of provincial income allocation from that taken in our letter F2010-0382161I7."
6 January 2004 T.I. 2003-004143
Gross revenue would include foreign exchange gains on income account but would not be reduced by foreign exchange losses; and would include interest income on it to a company loans receivable but would not be reduced by interest expense incurred in inter company loans payable. Investment tax credits would not be added to gross revenue.
19 May 1994 T.I. 5-940551 -
Recapture of depreciation does not constitute "gross revenue" for purposes of Regulation 402(3).
15 February 1994 Memorandum 7-933546
Where an oil and gas company does not have inventory readily available at a specific location and, in order to avoid transportation costs, borrows that product from another company as part of an exchange agreement, the swap under the Law of Bailments will be characterized as a sale and, therefore, will also give rise to a sale for purposes of ss.402(3) and (4) of the Regulations and the definition of "gross revenue".