Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Application of paragraph 13(7)(e) where paragraph 12(1)(g) applies to the vendor.
Position: No comment.
Reasons: Need to either request a ruling or go get a TSO referral.
XXXXXXXXXX 2001-007483
August 22, 2001
Dear XXXXXXXXXX:
Re: Application of Paragraph 13(7)(e) of the Income Tax Act (the "Act")
We are writing in reply to your letter of March 14, 2001 wherein you requested our views regarding the application of paragraph 13(7)(e) of the Act in a situation where a depreciable property is acquired by a taxpayer ("purchaser") and the total consideration to be paid by the purchaser is based on the future revenues from the production or use of the property.
The situation described in your letter appears to involve a completed or proposed transaction between two persons who do not deal at arm's length with each other and in respect of which the relevant facts or other information have not been made available to us (including copies of any pertinent agreements). Therefore, we are unable to provide any comments on your particular situation at this time. Confirmation of the income tax consequences involving proposed transactions will only be provided in response to a request for an advance income tax ruling submitted in accordance with the guidelines set out in Information Circular 70-6R4 ("IC-70-6R4") dated January 29, 2001. However, if the situation relates to a completed transaction your request (accompanied by all the relevant facts or other information) must be made to the particular taxpayer's local Tax Services Office.
Notwithstanding the above, it is our understanding that the "particular time" referred to in paragraph 13(7)(e) means the time that the particular depreciable property referred to therein is actually acquired by the taxpayer.
Yours truly,
for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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