Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-06-12 and last amended on 2014-01-01. Previous Versions

Offset of Refund Interest and Arrears Interest

Marginal note:Definitions
  •  (1) The definitions in this subsection apply in this section.

    “accumulated overpayment amount”

    « trop-payé accumulé »

    “accumulated overpayment amount”, of a corporation for a period, means the overpayment amount of the corporation for the period together with refund interest (including, for greater certainty, compound interest) that accrued with respect to the overpayment amount before the date specified under paragraph (3)(b) by the corporation in its application for the period.

    “accumulated underpayment amount”

    « moins-payé accumulé »

    “accumulated underpayment amount”, of a corporation for a period, means the underpayment amount of the corporation for the period together with arrears interest (including, for greater certainty, compound interest) that accrued with respect to the underpayment amount before the date specified under paragraph (3)(b) by the corporation in its application for the period.

    “arrears interest”

    « intérêts débiteurs »

    “arrears interest” means interest computed under paragraph (5)(b), 129(2.2)(b), 131(3.2)(b), 132(2.2)(b), 133(7.02)(b) or 160.1(1)(b), subsection 161(1) or (11), paragraph 164(3.1)(b) or (4)(b) or subsection 187(2).

    “overpayment amount”

    « trop-payé »

    “overpayment amount”, of a corporation for a period, means the amount referred to in subparagraph (2)(a)(i) that is refunded to the corporation, or the amount referred to in subparagraph (2)(a)(ii) to which the corporation is entitled.

    “refund interest”

    « intérêts créditeurs »

    “refund interest” means interest computed under subsection 129(2.1), 131(3.1), 132(2.1), 133(7.01) or 164(3) or (3.2).

    “underpayment amount”

    « moins-payé »

    “underpayment amount”, of a corporation for a period, means the amount referred to in paragraph (2)(b) payable by the corporation on which arrears interest is computed.

  • Marginal note:Concurrent refund interest and arrears interest

    (2) A corporation may apply in writing to the Minister for the reallocation of an accumulated overpayment amount for a period that begins after 1999 on account of an accumulated underpayment amount for the period if, in respect of tax paid or payable by the corporation under this Part or Part I.3, II, IV, IV.1, VI, VI.1 or XIV,

    • (a) refund interest for the period

      • (i) is computed on an amount refunded to the corporation, or

      • (ii) would be computed on an amount to which the corporation is entitled, if that amount were refunded to the corporation; and

    • (b) arrears interest for the period is computed on an amount payable by the corporation.

  • Marginal note:Contents of application

    (3) A corporation’s application referred to in subsection (2) for a period is deemed not to have been made unless

    • (a) it specifies the amount to be reallocated, which shall not exceed the lesser of the corporation’s accumulated overpayment amount for the period and its accumulated underpayment amount for the period;

    • (b) it specifies the effective date for the reallocation, which shall not be earlier than the latest of

      • (i) the date from which refund interest is computed on the corporation’s overpayment amount for the period, or would be so computed if the overpayment amount were refunded to the corporation,

      • (ii) the date from which arrears interest is computed on the corporation’s underpayment amount for the period, and

      • (iii) January 1, 2000; and

    • (c) it is made on or before the day that is 90 days after the latest of

      • (i) the day of sending of the first notice of assessment giving rise to any portion of the corporation’s overpayment amount to which the application relates,

      • (ii) the day of sending of the first notice of assessment giving rise to any portion of the corporation’s underpayment amount to which the application relates,

      • (iii) if the corporation has served a notice of objection to an assessment referred to in subparagraph (i) or (ii), the day of sending of the notification under subsection 165(3) by the Minister in respect of the notice of objection,

      • (iv) if the corporation has appealed, or applied for leave to appeal, from an assessment referred to in subparagraph (i) or (ii) to a court of competent jurisdiction, the day on which the court dismisses the application, the application or appeal is discontinued or final judgment is pronounced in the appeal, and

      • (v) the day of sending of the first notice to the corporation indicating that the Minister has determined any portion of the corporation’s overpayment amount to which the application relates, if the overpayment amount has not been determined as a result of a notice of assessment sent before that day.

  • Marginal note:Reallocation

    (4) The amount to be reallocated that is specified under paragraph (3)(a) by a corporation is deemed to have been refunded to the corporation and paid on account of the accumulated underpayment amount on the date specified under paragraph (3)(b) by the corporation.

  • Marginal note:Repayment of refund

    (5) If an application in respect of a period is made under subsection (2) by a corporation and a portion of the amount to be reallocated has been refunded to the corporation, the following rules apply:

    • (a) a particular amount equal to the total of

      • (i) the portion of the amount to be reallocated that was refunded to the corporation, and

      • (ii) refund interest paid or credited to the corporation in respect of that portion

      is deemed to have become payable by the corporation on the day on which the portion was refunded; and

    • (b) the corporation shall pay to the Receiver General interest at the prescribed rate on the particular amount from the day referred to in paragraph (a) to the date of payment.

  • Marginal note:Consequential reallocations

    (6) If a particular reallocation of an accumulated overpayment amount under subsection (4) results in a new accumulated overpayment amount of the corporation for a period, the new accumulated overpayment amount shall not be reallocated under this section unless the corporation so applies in its application for the particular reallocation.

  • Marginal note:Assessments

    (7) Notwithstanding subsections 152(4), (4.01) and (5), the Minister shall assess or reassess interest and penalties payable by a corporation in respect of any taxation year as necessary in order to take into account a reallocation of amounts under this section.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2000, c. 19, s. 48;
  • 2010, c. 25, s. 41.