New CRA Income Tax Folio on Deductibility of Fines and Penalties
On July 10, 2015, the CRA released Income Tax Folio S4-F2-C1, “Deductibility of Fines and Penalties”, which replaces and cancels former Interpretation Bulletin IT-104R3. In addition to consolidating the content of the former Interpretation Bulletin, the Chapter Folio discusses section 67.6 of the Income Tax Act (Canada), which overrules the Supreme Court of Canada’s decision in 65302 British Columbia Ltd. v. R., 99 DTC 5799 (SCC) by specifically prohibiting the deduction of a fine or penalty imposed under a statute after March 22, 2004. Several examples are provided to demonstrate how section 67.6 would apply in various hypothetical situations. Comments from the public about the Chapter Folio will be accepted until October 10, 2015.