Impact on taxable income

The Corporate Business Plan indicates that Canada Revenue Agency (CRA) is committed to excellence in program delivery by enhancing service and enhancing efforts to address non-compliance. As IFRS introduces fundamental changes to how business reports its income, the CRA will support Canadian businesses by providing them with appropriate information so that they may continue to meet their tax obligations. This website will be updated to inform you about tax implications from the introduction to IFRS as soon as available.

The Supreme Court of Canada stated in Canderel Ltd v The Queen 2002 SCC 46, that in ascertaining profit, the taxpayer is free to adopt any method which is not inconsistent with: (a) the provisions of the Income Tax Act; (b) established case law principles or “rules of law”; and (c) well-accepted business principles. Well-accepted business principles, which include but are not limited to the form codification found in GAAP, are not rules of law but interpretive aids.

Once adopted for accounting purposes, financial statements prepared under IFRSs will be considered an acceptable starting point for computing taxable income. As well, all references to GAAP in CRA documents or tax legislation can be interpreted as IFRSs for those entities that report under IFRSs.

After initial adoption, we expect taxpayers to apply IFRSs on a consistent basis to all income tax filing and all years.

It is expected that there will be implications on administration of Part IX of the Excise Tax Act, namely the Goods and Services Tax (GST) and Harmonized Sales Tax (HST), and the Income Tax Act. This may involve modifications to publicly available information and internal systems.

To this end, the CRA is analyzing IFRSs differences with Canadian GAAP to identify implications on tax administration in Canada.