Is Cash an Active Business Asset? CRA provides a number of factors to consider.


In a January 25, 2018 Technical Interpretation (2017-0717561E5, Doiron, W.), CRA was asked whether cash held by a corporation would be considered “used in an active business”.

The determination of whether cash or near-cash assets are used in an active business is also a question of fact. CRA offered the following general views:

  • If the withdrawal of the cash or near cash property would destabilize the business, this indicates it is used in the business.

  • Cash which is temporarily surplus to business needs, and is invested in short-term investments, may be considered used in the business.

  • Cash balances which accumulate and then are depleted due to annual seasonal fluctuations of an ongoing business will generally be considered used in the business.

  • permanent cash balance in excess of reasonable working capital requirements would generally not be used in active business.

  • Accumulation of funds in anticipation of purchase or replacement of capital assets, or repayment of long-term debt, will not generally qualify the funds as being used in the business.

  • Prudent financial management requires maintaining current assets (including inventory and accounts receivable, in addition to cash and near-cash assets) in excess of current liabilities, and this could support the use of cash in an active business; however, this would not include cash held to offset the non-current portion of long-term liabilities.

  • Where cash or near-cash assets fulfill a business requirement (e.g. certificates of deposit a supplier requires be maintained), such property would be used in the active business.

CRA stressed that these views were general in nature, and all relevant facts and circumstances must be reviewed for any specific situation, including the actual use of the cash, the nature of the business, and ordinary practice in the particular industry.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 440

Limitations to Small Business Deduction - Specified Corporate Income - CRA says that allocation of expenses to determine income subject to small business deduction restrictions must be "reasonable".


In a February 7, 2018 Technical Interpretation (2017-0706401E5, Couvrette, A.), CRA was asked about the streaming of expenses to offset income which would be ineligible for the SBD due to the SCI rules in preference to offsetting other income whose access to the SBD is not restricted. CRA indicated that the allocation of expenses to various revenue sources to determine net income from each source must be reasonable. The determination of a reasonable allocation would be a question of fact.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 440

Late appeal of a CPP or EI decision? The deadline for applying for a late CPP or EI appeal is only 90 days after the normal appeal deadline, unlike the 1 year window for an income tax appeal.


In a December 8, 2017 Tax Court of Canada case (Neptune Service Ltd. vs. H.M.Q., 2016-589(IT)I), the Court reviewed the taxpayer’s application to add assessments of CPP and EI to their income tax appeal.

Taxpayer loses
The deadline for appeal is 90 days after a CPP or EI assessment is confirmed, the same as for an income tax appeal. However, unlike an income tax appeal, where an appeal filed up to one year after the deadline may be accepted, the last possible date to request a late CPP or EI appeal is only 90 days after the appeal deadline. The application for the late income tax appeals was already past this deadline, so the taxpayer was too late to appeal the CPP and EI assessments.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 439

Online Access to Federal Acts and Regulations - Income Tax Act, CPP Act, EI Act, Canada Labour Code, and others can all be found online at


The Government of Canada provides online access to the consolidated Acts and Regulations of Canada. This includes, for example, the Income Tax ActFinancial Administration ActPension ActEmployment Insurance ActCanada Pension Plan, and Canada Labour Code.

The current and historical legislation and regulation is provided free of charge. While no annotation or commentary is provided, the above resource is useful, in particular, for Acts and Regulations which one may periodically reference, but not to the extent that one would purchase an annotated Act.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 438

Life in the Tax Lane - September 2018 (Episode 40)

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 


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