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

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act--,9come (
  ,3tractors
,numb]3 ,,it-#ib;,r#b
,date3 ,decemb] #bi1 #aihc
,ref];e3 ,subsec;n #i7#a7 7al sec;n
  #abe.a1 subsec;ns #abg7#e7 & #bdh7#a7
  & p>agraphs #bj7#a77gg7 & #bj7#a77m77

  ,? bullet9 replaces & c.els ,,it-#ib
dat$ ,m>* #c1 #aige4 ,curr5t revi.ns >e
designat$ 0v]tical l9es4

#a4 ,? bullet9 applies 6any prime
  3tractor or subcontractor :o is 5gag$
  9 ! 3/ruc;n (a build+1 road1 dam1
  bridge or simil> /ructure1 9
  circum/.es s* t title "!to ve/s 9 a
  p]son o!r ?an ! prime 3tractor or !
  subcontractor z x is 3/ruct$4 ,?
  bullet9 has no applic,n             #a
             ,,it-#ib;,r#b           a#a
  63tractors :o1 = any r1son1 reta9
  title 6! /ructure 7e4g4 build]s :o
  3/ruct h\ses on _! [n l&74 ,:ile !
  ,de"p;t 3sid]s ! fabric,n ( %ips 6be !
  manufacture ( gds = sale1 r ?an
  3/ruc;n1 a %ipbuild] :o builds a %ip
  "u a 3tract : provides t title "!to
  ve/s 9 ! %ip [n] z x is built1 may1
  )\t impair+ eligibil;y "u sec;n #abe.a
  or subsec;n #abg7#e71 foll[ a me?od (
  -put+ 9come ) respect 6t 3tract z
  describ$ 9 ? bullet94

           ,types ( ,3tracts
    
#b4 ,"! >e f\r basic types ( 3/ruc;n
  3tracts3
  7a7 co/-plus 3tracts1 "u : ! 3tractor
    *>ges ! co/ ( do+ c]ta9 "w1 plus an
    am.t calculat$ z a fix$ p]c5tage (
    ^? co/s2
  7b7 unit-price 3tracts1 "u : "! is a
    set price p] -plet$ unit : cov]s !
    3tractor's co/ & pr(it2           #b
             ,,it-#ib;,r#b           b#a
  7c7 fix$-fee 3tracts1 : di6] f co/-
    plus 3tracts only 9 t ! 3tractor's
    pr(it is a preset am.t r ?an a
    p]c5tage ( co/ 7in bo?1 ! 3tractor
    is 6rcv co/s plus pr(it72
  7d7 fix$-total-price 3tracts1 7"kn al
    z firm-price1 fix$ price or lump-sum
    3tracts71 "u : ! 3tractor agrees 6d
    c]ta9 "w =a set doll> : cov]s bo?
    co/ & pr(it4
--------------------------------------#b
  ,! g5]al rules : foll[ apply 6all =
  types ( 3tracts4

         ,g5]al ,rules--,9come
    
#c4 ,3/ruc;n 3tracts norm,y provide =a
  3tractor 6r5d]1 f "t 6"t1 progress
  bill+s z "w on a project proce$s4 ,s*
  3tracts al norm,y 5title ! 3tractor
  6be pd "!=1 usu,y af ! pur*as] or !
  pur*as]'s >*itect or 5g9e] has agre$ t
  ! "p (! "w cov]$ 0! progress bill+ has
  be5 satisfactorily -plet$4 ,!       #c
             ,,it-#ib;,r#b           a#b
  t]ms (a 3/ruc;n 3tract may al require
  ! pur*as] 6)hold a p]c5tage f ! pay;t
  ( ea* progress bill+ p5d+ satisfactory
  -ple;n (! 5tire job4 ,9 "s prov9ces ?
  )hold+1 or holdback z x is -monly "kn1
  is m&atory 0virtue (a prov9cial
  ,me*anic's ,li5 ,act or ,3/ruc;n ,li5
  ,act4 ,! am.t (a progress bill+1 less
  ! hold back if any1 2comes receiva# &
  m/ 2 9clud$ 9 ! 3tractors 9come at !
  "t :5 ! pur*as] or ! pur*as]'s >*itect
  or 5g9e] approves ! progress bill =
  pay;t4 ,! a7regate (! holdbacks 2comes
  receiva# & m/ 2 9clud$ 9 ! 3tractor's
  9come on ! "d t is ! lat] (
  7a7 ! "d on : ! >*itect or 5g9e]
    issues ! f9al c]tificate ( job
    -ple;n1 &
  7b7 ! "d ( expir,n (! li5 p]iod z
    /ipulat$ 9 ! applica# prov9cial
    /atute4
  
  ,if1 h["e1 a 3tractor *ooses 6report
  9come = tax purposes 09clud+ "!9    #d
             ,,it-#ib;,r#b           b#b
  all am.ts t h be5 bill$ 6! pur*as]1
  ev5 ?\< n approv$ = pay;t 0! pur*as]
  or ! >*itect or 5g9e]1 or 9 respect (
  : a me*anic's li5 p]iod has n expir$1
  x w 2 a3epta# 6! ,de"p;t provid$ t !
  3tractor does s 3si/5tly f ye> 6ye>4
  ,9 less =mal situ,ns ": no 3/ruc;n
  3tract exi/s or ": ! t]ms (a 3tract d
  n require =mal approval ( progress
  bill+s 0! pur*as]'s >*itect or 5g9e]
  2f pay;t1 ! am.t "!(1 net ( holdbacks
  if any1 w 2 3sid]$ 6be receiva# &
  9cluda# 9 ! 3tractor's 9come z (! date
  s* bill+s >e made4
#d4 ,any am.t actu,y rcvd 9 ! c\rse (
  busi;s 0a 3tractor1 9clud+ any am.t :
  %d h be5 approv$ = pay;t 0! pur*as] or
  0! >*itect or 5g9e] 2f pay;t b 0 n1 or
  : %d h be5 )held 0! pay] z a holdback
  b 0 n1 m/ 2 9clud$ 9 ! 9come (!
  3tractor =! tax,n ye> dur+ : x 0 rcvd4
#e4 ,": an am.t has be5 rcvd & 0 requir$
  0virtue ( p>agraph #ab7#a77a7 6be
  9clud$ 9 9come1 2c ! am.t is a      #e
             ,,it-#ib;,r#b           c#b
  pay;t 9 adv.e = "w 6be
--------------------------------------#c
  p]=m$ at a lat] date1 a res]ve "u
  p>agraph #bj7#a77m7 is availa# 6a
  3tractor provid$ t ! co/s 6be 9curr$
  af ! 3tractor's fiscal ye> 5d c 2
  id5tifi$4 ,a res]ve "u p>agraph
  #bj7#a77m7 is g5],y n availa# 6a
  3tractor ) respect 6any am.t rcvd &
  9clud$ 9 9come ": ! am.t has be5 bill$
  0! 3tractor & pd 0! cu/om] on ! basis
  ( approval 0! cu/om] or 0! >*itect or
  5g9e]1 2c s* approval is prima facie
  evid;e t ! "w cov]$ 0! 3tractors bill+
  has 9 fact be5 -plet$4 ,a res]ve "u
  p>agraph #bj7#a77m7 _c 2 claim$ 0a
  taxpay] ) respect 6an am.t bill$ b n
  rcvd1 ev5 ?\< ! am.t has be5 9clud$ 9
  9come4

        ,g5]al ,rules--,exp5ses
    
#f4 ,subject 6#h 2l all co/s 9curr$ 9 a
  tax,n ye> 0a 3tractor 9 ! p]=m.e    #f
             ,,it-#ib;,r#b           a#c
  (a 3tract >e deducti# 9 -put+ 9come =!
  ye>1 ev5 ?\< "p (! rev5ue relat+ 6"w
  -plet$ may n 2 9clud$ 9 9come until a
  subsequ5t ye> 2c progress bill+s )
  respect "!to h n be5 approv$ = pay;t &
  "!=e h n 2come receiva# 9 a3ord.e )!
  -;ts 9 #c abv 2f ! 5d (! "picul> tax,n
  ye>4
#g4 ,=! purpose ( #f abv1 co/s 9curr$ 9
  ! ye> 9 ! p]=m.e (a 3tract 9clude
  7a7 ! co/ ( mat]ials =a 3tract t h be5
    deliv]$ 6! job site1 :e!r or n put 9
    place1
  7b7 all o!r direct & g5]al co/s &
    exp5ses : >e prop] deduc;ns 9 -put+
    9come "u ,"p ;,i (! ,act1
  7c7 ! gross am.t1 less holdback if
    any1 ( progress bill+s r5d]$ 0a
    subcontractor 6! 3tractor t h be5
    approv$ = pay;t1 &
  7d7 ! a7regate ( holdbacks )held f
    pay;ts made 0a 3tractor 6a
    subcontractor t >e pd or paya# 9 !
    ye> 0! 3tractor 9 a3ord.e )!      #g
             ,,it-#ib;,r#b           b#c
    t]ms (! appropriate prov9cial /atute
    or1 9 ! abs;e ( any s* /atute1 !
    t]ms (! subcontract xf4
#h4 ,9 3tra/ 6#g abv1 a co/ is n 3sid]$
  6h be5 9curr$ 9 ! p]=m.e (a 3tract 9 !
  ye> & is n deducti# 9 ! ye> 9 a3ord.e
  )! -;ts 9 #f abv :5 x is1 = example1
  7a7 ! co/ ( mat]ials t h be5 m]ely
    ord]$ = future deliv]y1
  7b7 ! co/ ( mat]ials & supplies t >e
    describ$ 9 a 3tractor's 9v5tory1 z t
    t]m is def9$ 9 subsec;n #bdh7#a71
    9clud+ ^? e>m>k$ =a specific 3tract
    b n deliv]$ 6! job site1
  7c7 a holdback )held 0a 3tractor f a
    subcontractor if ! 3tractor's
    liabil;y 6! subcontractor
--------------------------------------#d
    9 respect "!( has n be5 e/abli%$ 0!
    issu.e (a requir$ c]tificate 0an
    >*itect or 5g9e]1 or
  7d7 ! gross am.t (a bill+ r5d]$ 0a
    subcontractor 6a 3tractor t
                                      #h
             ,,it-#ib;,r#b           a#d
    requires1 b has n rcvd1 approval
    prior 6pay;t4
#i4 ,at any "picul> "t1 ! 9v5tory (a
  3tractor z ref]r$ 6in #h7b7 abv
  excludes all t lab\r & mat]ial t has
  be5 9corporat$ 96a /ructure1 s t title
  "!to no l;g] ve/s 9 ! 3tractor1 & al
  excludes ! a7regate ( ^? co/s describ$
  9 #g7a7 abv4

          ,fix$-,fee ,3tracts
    
#aj4 ,if bill+s "u a fix$-fee 3tract >e
  made z am.ts >e approv$1 & if a
  r1sona# propor;n (! total pr(it is
  9clud$1 ! report+ ( 9come on ! basis (
  ^? bill+s is a3epta# 6! ,de"p;t4
  ,o!rwise1 9come %d 2 a3ru$ 69clude !
  "p (! pr(it e>n$ & paya# 9 ! ye> 9
  a3ord.e )! t]ms (! 3tract4
#aa4 ,a 3tractor may al 5t] 96a 3tract
  "u :1 =a fee1 ! 3tractor "utakes
  6manage or sup]vise a c]ta9 job4
  ,ord9>ily1 ! 3tractor does n        #i
             ,,it-#ib;,r#b           b#d
  pur*ase & bill mat]ials "u ! 3tract1 b
  if d"o1 x is z ag5t =! 3tractor's
  pr9cipal4 ,9 s* a 3tract1 ! fee %d 2
  9clud$ 9 9come ac 6! t]ms (! 3tract1 :
  may provide = xs pay;t on a mon?ly1
  qu>t]ly or o!r basis4

      ,fix$-,total-,price ,3tracts
       7,use ( 8,-ple;n ,me?od07
    
#ab4 ,g5],y1 rev5ue f a 3tract ( ? k9d
  %d 2 9clud$ 9 9come (! ye> 9 :
  c]tificates ( -ple;n or "pial -ple;n
  >e issu$ pursuant 6! 3tract4 ,h["e1 ":
  s* 3tracts may r1sonably 2 expect$ 6be
  -plet$ )9 two ye>s f ! date ( _!
  -m;e;t1 =! 3v5i;e ( bo? ! taxpay] &!
  ,de"p;t an alt]native me?od -monly
  call$ ! 8-ple;n me?od0 ( report+
  3tract rev5ue may 2 adopt$1 "nly 6take
  ! :ole rev5ue 79clud+ holdbacks7 f ea*
  3tract 969come (! ye> 9 : ! "w "!on is
  physic,y -plet$4 ,norm,y1 ! ,de"p;t w
  a3ept ! date ! f9al 5g9e]'s or     #aj
             ,,it-#ib;,r#b           c#d
  >*itect's c]tificate is issu$ z ! date
  ( physical -ple;n4 ,h["e1 ": !
  3tractor &! [n] >e n d1l+ at >m's
  l5g?1 any unusual delay 9 _! issu.e (
  c]tificates w 2 exam9$ :5 decid+ !
  date4 ,": s* c]tificates >e n requir$1
  ! date ( physical -ple;n m/ 2 det]m9$
  on ! facts ( ea* case1 tak+ 963sid],n
  factors : su7e/ t ! 3tract is
  8-plet$01 s* z a3ept.e (! project 0!
  [n] except = m9or adju/;ts = 9complet$
  "w1 or actual o3upancy 0! [n]4 ,": !
--------------------------------------#e
  -ple;n me?od is us$1 a4i;ns 6a job
  requir+ extra "w 6be p]=m$ : w po/p"o
  -ple;n (! job f "o tax,n ye> 6a lat]
  "o %d 2 tr1t$ z a sep>ate 3tract4
#ac4 ,a 3tractor :o *ooses 6adopt !
  -ple;n me?od is requir$ 6d s 9 respect
  ( all %ort-t]m 3tracts & is requir$
  6use ! same me?od 3si/5tly f ye> 6ye>4
  ,h["e1 2c ! me?od is = 3v5i;e only1 a
  3tractor :o has be5 us+ x may *ange 6!
  me?od ( report+ 9come 9 a3ord.e    #aa
             ,,it-#ib;,r#b           a#e
  )! g5]al rules /at$ 9 p>agraphs #c
  6#i1 b ! ,de"p;t w n agree 6a rev]sal
  6! -ple;n me?od 9 a lat] ye>4 ,!
  ,de"p;t w agree 6a *ange f ! me?od
  \tl9$ 9 ! g5]al rules 6! -ple;n me?od
  provid$ t ! 3tractor has n"e be5 on t
  me?od 2f4 ,any *ange %d 2 e6ect$ s t
  no am.ts >e exclud$ 9 -put+ 9come4
#ad4 ,3tr>y 6! g5]al rules 9 p>agraph #f
  6#i abv reg>d+ exp5ses1 a 3tractor us+
  ! -ple;n me?od m/ def] 6! ye> 9 : a
  %ort-t]m 3tract is -plet$ all ! direct
  co/s ( t 3tract 9curr$ 9 a previ\s
  ye>4 ,if ! 3tractor al 3si/5tly def]s
  ov]h1d & o!r 9direct exp5ses relative
  6s* 3tracts1 t practice is a3epta#4
#ae4 ,"u ! -ple;n me?od1 a loss on a
  %ort-t]m 3tract is tak5 96a3.t only 9
  -put+ ! 9come (! ye> 9 : ! 3tract is
  physic,y -plet$4 ,no provi.n is all[$
  9 a ye> prior 6t ( -ple;n = an
  anticipat$ loss on ! 3tract4
#af4 ,if a 3tractor previ\sly us$ !
  -ple;n me?od ( report+ 9come on    #ab
             ,,it-#ib;,r#b           b#e
  all 3tracts t cd r1sonably 2 expect$
  6be -plet$ 9 less ?an two ye>s1 & !n 9
  a "picul> ye> decides 6report 9come f
  "o or m s* 3tracts 9 a3ord.e )! me?od
  describ$ 9 p>agraphs #c 6#i abv 7!
  8progress me?od071 ! ,de"p;t takes !
  view t ? deci.n is 9 e6ect a reque/
  63v]t all 3tracts 6! progress me?od4

      ,pur*ase & ,sale ( ,3tracts
    
#ag4 ,": a p]son obta9s a 3tract &
  agrees 6sell 6ano!r p]son ! "r 6c>ry \
  or -plete ! 3tract1 ! am.t rcvd on !
  sale is reg>d$ z 2+ 9 lieu (! pr(its
  expect$ 6be e>n$ _h ! 3tract be5 c>ri$
  \ 9 full1 & "!=e ! am.t is 3sid]$ 6be
  9come4 ,on ! o!r h&1 ! co/ 6! pur*as]
  is reg>d$ z a deducti# co/ ( e>n+
  3tract 9come4
#ah4 ,if ! v5dor p]=ms "p (! "w requir$
  0! 3tract prior 6! sale (! rema9d] &
  bills or
                                     #ac
             ,,it-#ib;,r#b            #f
  reta9s ! "r 6bill = ? "w1 ! v5dor's
  9come f ! 3tract is -put$ ac 6!
  pr9ciples \tl9$ abv4

     ,deposits z ,secur;y = ,p]=m.e
    
#ai4 ,a 3tractor is (t5 requir$ 6make a
  deposit z secur;y = prop] p]=m.e (a
  3tract "utak5 & "s"ts ? require;t is
  satisfi$ 0! deposit ( m>keta#
  securities s* z be>] bonds4 ,%d !
  value (! securities decr1se :ile !y >e
  on deposit1 t decr1se is a capital
  loss & does n =m "p (! co/ (! 3tract1
  ev5 ?\< ! securities 7 acquir$ = t
  purpose & 7 4pos$ ( at a loss :5 no
  l;g] ne$$4 ,3v]sely1 ( c\rse1 any ga9
  made on _! 4posal is a capital ga94





                                     #ad
            ,9v5tory ,all[.e         a#f
    
#bj4 ,see ,,it-#dce;,r = -;ts 3c]n+ !
  eligibil;y (a 3tractor's 9v5tory =!
  9v5tory all[.e provid$ 0p>agraph
  #bj7#a77gg74


















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