The firm's books, and its tax returns, still assumed an election the Income Tax Act stopped offering designated professionals years earlier.
Short answer
Since 2017 there is no election to defer it. Income Tax Act s.34, the old billed-basis election that let six designated professions leave their work in progress out of income until billed, was repealed, and s.10(4)(a) now requires WIP to be valued at the amount reasonably expected to become receivable — so a firm still filing on a billed basis is simply following a rule that no longer exists.
Section 34 now reads, in full: “[Repealed, 2017, c. 33, s. 7]” — the old billed-basis election is gone from the consolidated statute. In its place, s.10(4)(a) fixes the value: the fair market value of property that is “work in progress at the end of a taxation year of a business that is a profession means the amount that can reasonably be expected to become receivable in respect thereof after the end of the year.”
This only ever reached the six designated professions the old election covered — accountants, dentists, lawyers, physicians, chiropractors and veterinarians. A trades or ordinary service business carrying unbilled revenue was never inside s.34 to begin with, so its WIP question is a different one entirely. Where a firm’s post-repeal returns have understated income because they never adjusted, the fix on a sale is refiling before closing, with the vendors carrying responsibility for the correction rather than leaving it inside the buyer’s newly acquired history.
See it decided in the professional-practice-WIP case file, the inventory-method-changed file and the deferred-revenue file.
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