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