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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Does the rollover provision in subsection 51(1) or subsection 86(1) of the Income Tax Act (the "Act") apply in a situation where the corporation that is issuing a new share in exchange for its old share is a resident of Canada and the shareholder is a non-resident of Canada.
Position:
Yes.
Reasons: Subsections 51(1) and 86(1) are not restricted to Canadian shareholders.
XXXXXXXXXX 2001-011637
Jim Wilson
January 4, 2002
Dear XXXXXXXXXX:
Re: Share for Share Exchange Involving a Non-Resident Shareholder
This is in reply to your letter of July 16, 2001, addressed to the CCRA - Ottawa Research Unit, regarding a share for share exchange by a corporation resident in Canada and its non-resident shareholder. More specifically, you wish to know whether the rollover provision in subsection 51(1) or subsection 86(1) of the Income Tax Act (the "Act") apply in a situation where the corporation that is issuing a new share in exchange for its old share is a resident of Canada and the shareholder is a non-resident of Canada. Your letter was received by our Directorate on January 2, 2002.
We confirm that as long as the other conditions described in subsection 51(1) or 86(1) of the Act are met, those rollover provisions may apply to a non-resident shareholder (individual or corporation) involved in a share for share exchange transaction with a corporation resident in Canada.
We trust our comments will be of assistance to you. Should you require technical assistance of this nature in the future, we would suggest you contact your local tax services office. If you require an advance income tax ruling on a proposed transaction, you should refer to Information Circular 70-6R4 dated January 29, 2001, which is available on the CCRA's web site on the internet at www.ccra-adrc.gc.ca.
Yours truly,
Jim Wilson
for Director
International and Trusts Division
Income Tax Rulings and
Interpretations Directorate
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