,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,sale ( ,a3.ts ,receiva#
,numb]3 ,,it-#ahh;,r
,date3 ,may #bb1 #aihd
,ref];e3 ,sec;n #bb 7al sec;ns #bh1 #cd1
  #he1 #hh & #ig1 subsec;ns #ej7#a7 &
  #fi7#a71 & p>agraphs #bj7#a77l7 &
  #bj7#a77p77

  ,? bullet9 c.els & replaces ,9t]pret,n
,bullet9 ,,it-#ahh dat$ ,novemb] #ab1
#aigd4 ,curr5t revi.ns >e designat$
0v]tical l9es4

#a4 ,sec;n #bb is applica# ^u elec;n 0a
  v5dor &a pur*as]1 ": ! v5dor
  79dividual1 "pn]%ip1 corpor,n or
  e/ate7 sells all or sub/anti,y all (!
  assets (a busi;s t 0 c>ri$ on 9
  ,canada 6! pur*as] :o proposes      #a
              ,,it-#ahh;,r           a#a
  63t9ue ! busi;s4 ,all or sub/anti,y
  all is 3sid]$ 6be at l1/ #ij@3p (!
  prop]ty us$ 9 c>ry+ on ! busi;s4 ,!
  busi;s assets sold m/ 9clude all !
  a3.ts receiva# (! v5dor t >e \t/&+ at
  ! "t (! sale4 8,a3.ts receiva#0
  9cludes ! debts >is+ f loans made 9 !
  ord9>y c\rse (! busi;s if "p (! busi;s
  0 ! l5d+ ( m"oy4
#b4 ,if ! ,m9i/] a3epts ! elec;n 7see #e
  2l7 ! v5dor (! busi;s is 5titl$
  6deduct 9 ! ye> ( sale any loss on
  sale (! a3.ts receiva# -put$ z !
  di6];e 2t ! proce$s rcvd & _! face
  value 7exclud+ ^? a3.ts previ\sly
  writt5 (f z bad debts "u p>agraph
  #bj7#a77p774 ,! loss is -put$ )\t
  reg>d 6any res]ve = d\bt;l debts1 :e!r
  or n s* res]ve has be5 previ\sly all[$
  z a deduc;n "u p>agraph #bj7#a77l74
#c4 ,! am.t t ! v5dor is all[$ z a
  deduc;n 9 ! ye> ( sale pursuant
  6p>agraph #bb7#a77a7 7see #b abv7 m/ 2
  9clud$ 9 ! pur*as]'s 9come 9 !      #b
              ,,it-#ahh;,r           b#a
  ye> (! pur*ase4 ,p>agraph #bb7#a77c7
  provides t ! pur*as] may !n d1l )!
  a3.ts receiva# = tax purposes z ?\< !y
  _h >is5 :ile s* pur*as] 0 ! [n] (!
  busi;s2 t is1 = ^! a3.ts ! pur*as] may
  claim a deduc;n =a res]ve = d\bt;l
  debts "u p>agraph #bj7#a77l7 & may
  deduct bad debts "u p>agraph
  #bj7#a77p74 ,a receiva# t ! v5dor
  previ\sly deduct$ "u p>agraph
  #bj7#a77p7 may n 2 deduct$ 0! pur*as]4
  ,al1 if ! pur*as] %d collect a
  receiva# previ\sly deduct$ 0! v5dor "u
  p>agraph #bj7#a77p71 x m/ 2 9clud$ 9
  9come4
--------------------------------------#b
#d4 ,t por;n (! sale price (! busi;s t
  is ! 3sid],n =! a3.ts receiva# is
  requir$ 6be set \ 9 ! elec;n : ! v5dor
  & pur*as] m/ execute pursuant
  6subsec;n #bb7#b74 ,! elec;n m/ 2 made
  on =m ,t#bjbb & %d 2 fil$ )! tax
  return =! ye> (! sale4 ,ref];es to
  8ye>0 & 8tax,n ye>0 9 subsec;n      #c
              ,,it-#ahh;,r           a#b
  #bb7#a7 ref] 6! fiscal p]iod (a
  busi;s4
#e4 ,! am.t t is /at$ 9 ! elec;n 6be !
  3sid],n =! a3.ts receiva# is f9al =
  tax purposes z f> z ! v5dor & pur*as]
  >e 3c]n$ & _c lat] 2 alt]$4 ,x is n
  necess>ily b9d+ on ! ,m9i/]1 h["e1 &
  may 2 "q$ on assess;t if x is 3sid]$ n
  6reflect ! facts (! sale1 s* z :5 !
  face value (! debts sold is 9correctly
  /at$ or :5 ! 3sid],n actu,y pd is
  di6]5t f t set \ 9 ! elec;n z pd4 ,if
  ! v5dor & pur*as] >e n d1l+ at >m's
  l5g? &! fair m>ket value (! a3.ts
  receiva# sold 0 m or less ?an !
  3sid],n pd = !m1 ! provi.ns ( p>agraph
  #fi7#a77a7 or 7b7 w 2 appli$ 6!
  transac;n4
#f4 ,if ! agree;t =! sale (! busi;s does
  n specify :at "p (! total 3sid],n is
  =! a3.ts receiva#1 a r1sona# alloc,n
  m/ 2 made 2t a3.ts receiva# & o!r
  assets 9clud$ 9 ! sale4
                                      #d
       ,o!r ,sales or ,transf]s (    b#b
            ,a3.ts ,receiva#
    
#g4 ,if ! sale ( a3.ts receiva#
  0taxpay]s on ! a3rual basis does n
  meet ! require;ts "u sec;n #bb z \tl9$
  abv1 or if ! v5dor &! pur*as] d n file
  an elec;n1 any loss on sale w 2 a
  capital loss 6! v5dor1 un.s ! v5dor is
  a trad] 9 a3.ts receiva#4 ,s* a loss
  is tr1t$ 9 a3ord.e )! provi.ns (! ,act
  gov]n+ capital losses4 ,h["e1 ! v5dor
  does h ! "r 6e/abli% t1 z (! date (!
  sale1 c]ta9 (! a3.ts receiva# 7 bad
  debts : met ! require;ts ( p>agraph
  #bj7#a77p7 & 7 "!=e deducti# z an
  exp5se (! ye>4 ,! pur*as] _c claim
  deduc;ns "u p>agraph #bj7#a77l7 or 7p7
  =! a3.ts pur*as$1 & any ga9 or loss on
  r1liz,n (! a3.ts is a capital ga9 or
  loss un.s ! pur*as] is a trad] 9 a3.ts
  receiva#4 ,if1 at ! 5d (a tax,n ye>
  5d+ subsequ5t 6! pur*ase1 any "o (!
  pur*as$ a3.ts receiva# is 3sid]$
  uncollecti#1 ! pur*as] is deem$1    #e
              ,,it-#ahh;,r           c#b
  0subsec;n #ej7#a7 (! ,act1 6h 4pos$ (
  x at t "t1 giv+ rise 6a capital loss4
  ,at ! same "t ! pur*as] is deem$ 6h
  reacquir$ ! receiva# = nil & any
  recov]y or 4posi;n (! bad debt is
  9clud$ 9 ! -put,n ( capital ga9s 9 !
  ye> ( recov]y4
--------------------------------------#c
#h4 ,": 9 ! ord9>y c\rse ( busi;s a
  taxpay] 4c.ts cu/om]'s trade pap] s* z
  notes & bills receiva#1 ! am.t (! 4c.t
  is 3sid]$ 6be a deducti# busi;s
  exp5se1 n a capital loss4
#i4 ,an elec;n "u sec;n #bb is n availa#
  :5 debts >e 4tribut$ 6! p>5t on w9d+-
  up "u ! provi.ns ( sec;n #hh 2c a sale
  did n take place4 ,! use (! 8rollov]0
  provi.ns ( sec;n #ig 9 respect (! sale
  ( a3.ts receiva# precludes ! use (a
  sec;n #bb elec;n1 except 9 !
  circum/.es set \ 9 #ab ( ,,it-#dga4
  ,simil>ly1 ! use (! 8rollov]0 provi.ns
  ( sec;n #he precludes ! use (a sec;n
  #bb elec;n1 b "! is no?+ 6prev5t    #f
              ,,it-#ahh;,r           a#c
  ! sale (! a3.ts receiva# 7us+ sec;n
  #bb7 2f ! re/ (! assets >e 8roll$0 "u
  sec;n #he4

         ,ca% ,basis ,taxpay]s
    
#aj4 ,": a taxpay] :o reports 9come f a
  busi;s on a ca% basis 4poses (1 or
  c1ses 6c>ry on1 all or "p (! busi;s1 !
  am.t rcvd =! a3.ts receiva# t wd h be5
  9come is 9come 6! taxpay] 9 ! ye> (
  receipt pursuant 6subsec;n #bh7#e74 ,?
  is 9come :e!r x is rcvd f ! sale (a
  busi;s z a go+ 3c]n1 or f ! sep>ate
  sale or lat] collec;n (! a3.ts
  receiva#4 ,any am.t br"\ 969come
  0subsec;n #bh7#e7 0 eligi# 9come ) :
  6acquire an 9come av]ag+ annu;y 3tract
  7,i4,a4,a4,c474 ,h["e1 ! deduc;n all[$
  9 respect ( pay;ts made 0a taxpay] =!
  pur*ase ( an ,i4,a4,a4,c4 h be5 phas$-
  \ & g5],y is no l;g] all[a# af
  ,novemb] #ab1 #aiha4 ,x %d 2 not$ t
  use (! =w>d av]ag+ rules may 2      #g
              ,,it-#ahh;,r           b#c
  b5eficial 9 a ye> subsequ5t 6#aiha :5
  subsec;n #bh7#e7 9come is report$4 ,!
  provi.ns ( sec;n #aai1 av]ag+ = f>m]s
  & fi%]m51 may al 2 appli$4
#aa4 ,a taxpay] :o reports 9come f a
  busi;s on a ca% basis may 4pose (1 or
  c1se 6c>ry on1 ! busi;s or "p ( x &
  2come a non-resid5t ( ,canada 2f !
  a3.ts receiva# >e fully collect$4 ,!
  -;ts 9 ! prec$+ p>agraph 7except ! -;t
  on =w>d av]ag+7 apply 6all am.ts rcvd
  on collec;n (! a3.ts up 6& 9clud+ !
  ye> 9 : ! taxpay] c1s$ 6be a resid5t (
  ,canada1 at : "t ! taxpay] is requir$
  0subsec;n #bh7#d7 al 69clude 9 9come
  an am.t equal 6! value (! uncollect$
  a3.ts :5 ! taxpay] c1s$ 6be a resid5t
  ( ,canada4
--------------------------------------#d
       ,res]ves = ,d\bt;l ,a3.ts
    
#ab4 ,": a taxpay] :o reports 9come f a
  busi;s on an a3rual basis sells !
  busi;s1 any res]ve = d\bt;l debts   #h
              ,,it-#ahh;,r           a#d
  all[$ at ! 5d (! prec$+ tax,n ye> %d 2
  9clud$ 9 9come (! curr5t ye>4 ,no
  res]ve = d\bt;l debts is all[a# z (!
  date (! sale s9ce ! res]ve all[a# "u
  p>agraph #bj7#a77l7 is requir$ 6be
  calculat$ z (! 5d (! tax,n ye>1 :5 !
  a3.ts receiva# wd n 2 debts [+ 6!
  taxpay]4















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