|
Tax
and Revenue Administration
Alberta Corporate
Tax Act
Information
Circular CT-15R1 |
| Last Reviewed: |
April 1999 |
| Produced by: |
Alberta Finance and Enterprise, Tax and
Revenue Administration |
| For more information: |
tra.revenue@gov.ab.ca |
CT-15R1 / April 1999
ALBERTA
CORPORATE TAX ACT INFORMATION CIRCULAR:
CLEARANCE
CERTIFICATES
This Information Circular discusses the requirement for and issuance of clearance
certificates prior to the distribution of corporate assets. The topics discussed include:
- Section 49(1) of the Alberta Corporate Tax Act (the "Act"), requires that any
person (herein called a "representative") who is an assignee, liquidator,
administrator, receiver, receiver-manager or any other like person (except a trustee in
bankruptcy) must obtain a clearance certificate from the Minister of Finance prior to
the distribution of the assets of a corporation.
- The certificate provides assurance that all amounts described below have been paid or
security for the payment of the amounts has been accepted by the Minister of
Finance.
These amounts are:
a) any amount for which the corporation is liable under the Act for the taxation year
in which the distribution is made or any preceding taxation year; and
b) any amount for which the person is or can reasonably be expected to become liable to
Tax and Revenue Administration ("TRA") in his capacity as the corporation's
representative.
- If the representative does not obtain a clearance certificate and distributes any of the
property under his control, the representative will be held personally liable for the
payment of any amounts described above, up to the value of the property distributed.
- A clearance certificate is not required where the assets of a subsidiary are wound-up
into the parent as the parent assumes the debts of the subsidiary. A clearance certificate
is also not required where there is an amalgamation as the successor corporation is
responsible for the debts of the predecessor corporations.
- The reference to "any other like person" includes any person acting in the
capacity of liquidator whether the appointment was made formally or informally. It would
therefore include such persons as an auditor, director, officer or other person who had
assumed the responsibility for the liquidation. The facts of each case will determine
whether or not a particular person is identified under section 49(1).
- Generally, TRA will only issue a clearance certificate for Alberta purposes after a
clearance certificate has been granted by the Canada Revenue Agency (CRA) for federal purposes. In some
instances, where a distribution is urgently required, TRA may accept the request at the
same time as the request is made to CRA.
- The request for an Alberta clearance certificate, along with a copy of the federal
clearance certificate should be sent to TRA:
- Before granting a clearance certificate, TRA will verify the following:
a) a copy of the federal clearance certificate has been received;
b) where applicable, a final Alberta return has been filed;
c) no objections or appeals are outstanding for the corporation;
d) no audit action is outstanding or contemplated;
e) no reassessment actions are outstanding that would result in an adjustment to the
amount for which the corporation is liable under the following acts administered by TRA:
the Alberta Corporate Tax Act, the Fuel Tax Act, the Hotel Room Tax Act or the Tobacco Tax
Act; and
f) all outstanding liabilities under the above acts have been paid or security for the
amounts outstanding has been accepted.
- Paragraph 8(b) above indicates that a "final return" may be required. This
return is for the period up to and including the time of actual distribution of property.
The completion of a return for this period may be difficult without knowing the actual
date of the distribution. This date may be uncertain because the date of distribution may
itself depend upon the assessment of the return and the issuance of a clearance
certificate.
In order to resolve this situation, TRA may consider a return filed prior
to the distribution of property to be the final return where it is established that all
significant revenue-producing activities of the corporation have essentially ceased. To
help accomplish this, the representative may, for example, ensure that all monies are in
non-interest-bearing bank accounts or that all assets are put into a trust on behalf of
the shareholders. The assessment covering this final period would, then, be arranged to
facilitate the issuance of a clearance certificate before the distribution of property.
- In cases where the corporation is exempt from filing, TRA will require that a final
return has been filed with CRA.
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